This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Oracle Circling Back to Make Good

NEW YORK ( TheStreet) -- I had to offer an immediate apology following Oracle's (ORCL - Get Report) weaker-than-expected June quarter and what culminated in a disappointing end to an otherwise solid fiscal year.

While I'm not assuming blame for Oracle's underperformance, I share in the responsibility for raising expectations to a level that Oracle couldn't deliver. But that's in the past.

[Read: <a target="blank" data-add-tracking="true" href=""><em> Wall Street Seems All In on Adobe </em></a>]

On Wednesday, the database giant, which saw its stock plummet 9% immediately following the June announcement, will have some making up to do. After two consecutive quarters of lackluster sales, Oracle must prove to investors that these recent notions of "underlying fundamental issues" present at the company, are a myth. And Oracle's case needs to be convincing, especially given how well rivals such as (CRM) and Workday (WDAY) have performed.

To that end, I'm looking for significant improvement, not only in Oracle's overall revenue growth, but also in new software licenses and cloud software subscriptions. By "significant," I mean growth in the area of 3.5% to 4%. Posting growth of less than 1% just isn't going to cut it, especially when it missed management's own guidance.

While I will agree that the Street's reaction, and the stock's subsequent 9% decline, was completely overblown, Oracle may have had it coming. As noted, the March quarter, during which revenue fell 1%, wasn't any better. And as fundamentally solid as Oracle has always been, the Street has also demonstrated very little patience for underperforming mature companies.

By contrast, and in the case of Workday and, the Street is more than willing to reward incredible growth stories with outrageous valuations.

Also, Oracle certainly didn't help itself by issuing lower-than-expected guidance for the current quarter, on which it will report Wednesday. The Street will be looking for EPS of 54 cents on revenue of $8.48 billion, which represents revenue growth of 3.3%.

[Read: <a target="blank" data-add-tracking="true" href=""><em> Can Gen Y Shake Its Bad Rap at Work?</em></a>]

Clearly, the Street is not as optimistic as my projections. Citing IBM (IBM) and SAP (SAP) as providing better SaaS, or software-as-a-service, Oracle is said to be unprepared for the shift seen in enterprise, in terms of how IT companies procure strategic service initiatives. Although Oracle hasn't had any "blowout" quarters of late, to the extent that the company has been significantly outperformed by IBM and SAP, I disagree.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ORCL $35.70 0.00%
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs