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 Retains Bargain Status Despite Cautious Projections

NEW YORK ( TheStreet) -- Oracle (ORCL - Get Report) shares were slipping 0.5% Thursday to trade at $33.70, as the company continues to demonstrate that it's a low growth stock story that's still a good bargain.

On Wednesday, the software giant once again reported another quarter of sluggish revenue results during its fiscal first quarter call while managing to beat earnings per share estimates thanks to strength in its operating margins and lower tax rates. Revenues lagged as the hardware business as expected showed weakness offset by what looked to be a stronger quarter for its cloud endeavors, though they remain a smaller portion of its overall enterprise software business. Overall, new software licenses and cloud software subscriptions revenues rose 4% to $1.7 billion.

However, the company's estimates on new software licenses and cloud software for the second quarter were not spared from Oracle's overall conservative guidance Wednesday as the company cites tough comparisons and some uncertainty about the completion of large deals. "Even though our pipelines are big, we still have to close all those deals and I just can't assume that we will," CFO Safra Catz said during the company's earnings call. The forecasts failed to assuage investors who still want to see more evidence that the company is adequately combatting the risks faced by its core enterprise resource planning and database units amid the broader industry shift to demand for applications in the cloud as well as threats from competitors such as SAP's (SAP - Get Report) high-speed database, Hana.

The company predicts that new software license and cloud subscription revenue growth will fall in the range of negative 4% to positive 6% in the second quarter and that hardware product revenue will range from negative 9% to positive 1%. As a result, total revenue growth is expected to range from just 1% to 4%.

Garrett Marks and Emily Chan, analysts at Bernstein Research undescore that despite the increasing pressure the company faces from the cloud and competitors, Oracle after all is still the largest maker of corporate-database software and its "sticky" products and strong maintenance revenue creates a floor for the stock price.

Furthermore, "its maintenance stream provides downside protection with a 'safety net' in the $25 to $30 a share range and generates cash that could lay the framework for additional cash return," the analysts commented in a client note. Marks and Chan have a "market perform rating" on the stock, in comparison to the average "outperform" view on Wall Street.

Investors now turn to Oracle's annual OpenWorld conference which will kick off on Sept. 22. During the event the company is expected to reveal an in-memory option for the Oracle database and provide other product updates.

-- Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.>

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 $39.23 -0.15%
SAP $77.07 -0.52%
AAPL $93.24 -0.41%
FB $117.81 -0.21%
GOOG $701.43 0.82%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs