It's also possible that CIOs have arrived at the point where it has all it needs. I'm not suggesting that the cloud/Big Data market has suddenly become saturated. But still, I'm forced to appreciate that Oracle's sales decline may be reflective of a market that has peaked. This also supports why Oracle has been actively buying into other markets. The company's $2.1 billion acquisition of Acme Packet (APKT) and network vendor Tekelec, were two recent examples.
In the meantime, the company's strong cash position will continue to present management with plenty of options to navigate this soft patch. So I wouldn't abandon the stock just yet, especially when the company just announced $12 billion share buyback program, while also increasing the dividend by 100%.
Draw your own conclusions as to why management feels compelled to do this now. Clearly the company sees value in its stock. But Oracle has always been savvy when it comes to its dividend strategy. Last December, the company accelerated three quarterly payments into a special dividend in an effort to mitigate potential tax damages related to the fiscal cliff. It worked out great for investors. I expect the similar results for this new policy.
So, if I liked Oracle at $35 per share, I'm certainly going to love it at $30, especially with improving free cash flow margins. But conviction can only go so far. And management needs to help me not have to write another letter of apology.At the time of publication, the author held no position in any of the stocks mentioned. Follow @saintssense