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Understanding Oracle's Growth Position

Moving Forward

While Wall Street may wish to focus on the revenue miss, the overall report suggests this was a good quarter regardless. Likewise, Wall Street continues to overlook that Oracle understands its market better than its rivals. Though the popularity of the software as a service (SaaS) business has propelled Salesforce.com and others to new heights, it seems many continue to dismiss Oracle's dominance within that space.

Although competition from IBM (IBM), Microsoft (MSFT) and SAP (SAP) certainly exist, Oracle has been able grow its cloud products such as Exadata, Exalogic and Exalytics by 100% during the quarter. These will be the major drivers of the company's growth for many years to come.

Also working in Oracle's favor now and in the foreseeable future is the rate at which companies are accumulating "big data" as they strive to position themselves for cloud efficiency.

This places Oracle at an advantage above its rivals because of its dominance in the area of analytics or data manipulation. These are areas where it competes effectively with F5 (FFIV) and EMC (EMC).

Bottom Line

I have always liked Oracle and I don't see any reason to be concerned here solely based on its revenue miss. Astute investors understand the macro environment has had a lot to do with the results in the quarter. Though the stock has since rebounded from its previous lows of the year, I would still be a buyer at current levels -- particularly as growth projections suggests a fair value of $35 per share. It also helps that the company pays a handsome dividend.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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