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Oracle's Earnings: What Wall Street's Expecting

NEW YORK (TheStreet) -- Oracle (ORCL) is set to report earnings after the close of trading Thursday, and all eyes will be on whether the tough IT environment is continuing for the software giant.

Oracle, led by CEO Larry Ellison, is expected to earn 87 cents per share on $11.12 billion in revenue for its fiscal fourth quarter, according to analysts surveyed by Thomson Reuters.

Shares of Oracle were higher in Tuesday trading, up 0.8% to $34.54. Oppenheimer analyst Brian Schwartz, who rates shares "overweight", with a $40 price target, says the softer trends for Oracle are likely to continue, and could actually wind up weighing on Oracle's guidance, as it moves into fiscal 2014. "Recent feedback from our larger system integrator contacts was mixed as the pace of new strategic, enterprise-wide business initiatives experienced softer trends within their pipelines," Schwartz wrote in his note. This suggests that a tough IT selling environment for infrastructure software remains, consistent with our prior view, and could restrain Oracle's outlook."

Especially of concern for the May quarter is Oracle's European business, as the macro environment there continues to stay weak. Lazard analyst Joel Fishbein, who rates shares "buy" with a $41 price target, says Oracle is likely to be muted in its optimism, as Europe continues to struggle.

Fishbeing notes the fourth-quarter is usually Oracle's strongest, and it started the quarter with a strong pipeline. "Oracle entered the quarter with a robust pipeline, which combined with improving sales rep productivity and hardware business could offer potential upside to our estimates," Fishbein wrote. However, Europe isn't cooperating and could weigh on Oracle's results.

In light of the past earnings stumble, Oracle may have set the bar so low that it becomes nearly impossible to jump over it, even with Europe being a drag on the Redwood, Calif.-based software giant.

Credit Suisse analyst Philip Winslow, who rates Oracle "overweight", with a $40 price target, noted that some recent Oracle customers have been pushed to sign contracts before May 15th, which could be a good sign for the quarter. Winslow noted "...data points suggest that Oracle was pushing customers, partners, and sales people to sign contracts (especially those associated with smaller deal values) before May 15th, a strategy that we believe was utilized to "take stock" of how the quarter was closing earlier than normal in order to enable senior management to focus on larger transactions in the final two weeks."

--Written by Chris Ciaccia in New York

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