Notes from the Oracalapalooza Tour

SAN FRANCISCO -- Managing expectations is the name of the game that Oracle (ORCL) executives are playing this week, while meeting with clients and investors on the East Coast.

Oracle CFO Jeff Henley and senior vice president of marketing Mark Jarvis are meeting with investors in New York City Tuesday and Boston on Wednesday. A key message: Oracle's current quarter looks solid with a healthy pipeline of orders, say sources who have listened in.

However, the sources say, Oracle execs are also trying to manage expectations by reminding investors that just because the software giant had a blowout fourth quarter, historically a strong one for the company, that doesn't ensure a blowout fiscal first quarter. Last month, Oracle earned 36 cents per share in its fourth quarter ended May 31, four cents better than First Call's consensus estimate.

Morgan Stanley Dean Witter analyst Chuck Phillips says Oracle execs are attending a dinner hosted by the investment bank for Morgan clients Tuesday night in New York City for a briefing on the health of Oracle's business.

After meeting with management on Friday, Credit Suisse First Boston analyst Wendell Laidley reiterated his strong buy on the stock and raised his 12-month price target to $46 from $36 per share on belief that fourth-quarter sales momentum was so far spilling over into this quarter. CSFB has not underwritten for the Redwood Shores, Calif., company.

Another topic that investors may hear about is a new compensation plan for Oracle's sales reps, says a source who has already been briefed about the plan. Rather than giving sales reps a commission for each signed deal, the software company will hold off on handing out commissions until a rep has fulfilled at least half his or her annual quota, sources say.

Analysts familiar with the restructured commission plan say it's too early to tell whether the plan will boost Oracle's sales. On the one hand, they say, it may make Oracle's sales team more focused and dedicated in reaching the level of sales necessary to earn a commission.

But on the other hand, the demanding commission plan could create ill will among sales reps and spark attrition at a time when demand for Oracle's software appears to be picking up, they say.

Oracle's stock closed down 3/16, or 0.5%, at 38 11/16 Tuesday.

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