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Oracle Wins a Quarter

NEW YORK (TheStreet) -- Oracle (ORCL - Get Report) announced a winning quarter yesterday, beating sales estimates by $90 million and earnings estimates by 2 cents/share. 

This came just days after TheStreet reported on a tepid Morgan Stanley research report  that made the stock an early morning laggard. 

The stock is now trading around $36. Goldman Sachs has a $41/share price target on it. Our own analyst team re-affirmed a buy rating on the stock Monday.

What's happening?

As I've been reporting, the computing world has been rapidly moving away from what Oracle has long been selling, enterprise computing based on proprietary servers and databases, toward the cloud.

But what I and other analysts failed to perceive is that if the top of the cloud is "software as a service," an application delivered online, then Oracle's databases could still have enormous power to direct that cloud move.

Companies such as  (CRM) and Netsuite  (N), which sell software as a service through Oracle hardware, have successfully marketed themselves to enterprises as "cloud." Those customers haven't looked behind the curtain to see that the hardware savings of true cloud -- commodity servers, standardized software -- aren't there.

There are savings in "faux cloud" and there is comfort in the same database system you've depended upon for a decade. Oracle has taken full advantage of this.

In his conference call to discuss the earnings, CEO Larry Ellison emphasized the success of "Fusion Cloud" applications for human resources, customer relations and enterprise planning. These are the "big three" of traditional enterprise applications.

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