Maven: Listen to Oracle - TheStreet

Maven: Listen to Oracle

Acquisitions got ink, but lowered expectations on the call deserved it.
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For obvious reasons, The Business Press Maven was going to bury his lead about

Oracle's

(ORCL) - Get Report

good earnings, when his nerve endings went on end and he realized: The business media, those dense little devils, had buried

their

lead!

Before I flap my gums about this morning's Oracle headlines, let me back up.

The Business Press Maven, as you undoubtedly know, made some great calls in 2006:

warning readers away from ethanol highfliers even in the face of business media excitement;

calling

Pfizer's

(PFE) - Get Report

trip-up almost to the day; and

identifying the problem center in press coverage of the

Fed

, then giving the all-clear sign at the right moment. All in all, it was a year of sensational, meticulous perception.

Only when it came to Oracle did it seem my skills as oracle had abandoned me. About halfway through the year, I

snarked the company to death after it received glowing coverage when CEO Larry Ellison, who had been on what I took to be an unfocused acquisition binge, pontificated that the key to business success was ruthless focus. This while sunning himself on a yacht with a basketball court and preparing for the America's Cup.

When there is a spread between reality and business media perception, there is always danger or opportunity for investors. Here I thought Commodore Ellison was aware that his company's core database business was slowing and out of desperation was employing the typical (though typically unworkable) Plan B of buying everything not nailed down.

When Oracle reported good numbers in September, The Business Press Maven dutifully

ate crow.

But then came the December quarter, which raised some big question marks. In my annual column of

predictions for the year ahead, I said to beware Oracle in 2007.

Well, the company reported its fiscal third quarter Tuesday. Would the questions linger or even grow? Not for the business media.

"

Oracle Results Reflect Successful Acquisitions

," crowed

The Wall Street Journal

. Whoa! A big acquisition strategy takes time to get a final bead on, but the

Journal

, which buried a major portion of the company's conference call to the point of not mentioning it, had already declared success. Look at the lead: "Oracle Corp. has become the software industry's great consolidator and its latest results appear to show that its acquisitions strategy is panning out."

The New York Times

also failed to mention a hairy detail from the conference call. "

Oracle Says Profit Rose 35% to Exceed Expectations

," the

Times

wrote in its headline, letting Commodore Ellison take an as-yet unearned victory lap in the lead: "Lawrence J. Ellison's three-year buying spree as chief executive of Oracle appears to be paying off."

Again we see the use of the word "appear" to describe the seeming success -- as in, how it looks to someone who glanced at the company's third-quarter earnings release. But appearance doesn't always match sound, and The Business Press Maven's ears perked up on the company's conference call.

Said Safra Catz, Oracle's CFO and president:

As you might expect, we feel very good about our prospects into our seasonally strongest quarter, and we feel good about our momentum and our competitive position, and our ability to execute in the field with no distraction. With that said emphasis mine, as you know, last year, Q4 2006 was a blockbuster quarter, and we are up against some tough comparisons. Last year, new software license revenues were up a record 32% in Q4, with total revenue up 22%.

Catz went on to lower expectations for the coming quarter. Now, even if you think Commodore Ellison walks on the water he sails across, lowering the next quarter's earnings projections merits at least a mention, no?

I'll give the Commodore this: The third quarter looked groovy. But could lowered expectations, plus that second-quarter letdown, be signs of trouble in two out of three quarters? Does that "appear" to be good?

Look, too, at the slightly sly formulation of Catz's explanation. "As you know," we were told, last year's fourth quarter was really good. Comparisons are tough -- no argument here. But Safra, "as you know," the company has been aware of last year's fourth-quarter numbers for a long time. Why lower expectations now?

Speaking of low, one of my other predictions for 2007 was that the oft-mentioned saviors of newspapers would end up not buying the companies, so challenged (read: awful) was their future. For newspapers, as bad as the times seem, they're actually the good old days.

My heart aches for the fate of newspapers. But my mind aches still more at some of the coverage of their situation. Take this

Reuters

story on Wednesday's February revenue

release

from

The New York Times

(NYT) - Get Report

, puh-leese.

"Internet ad revenue," it stated, "rose 14.3 percent in February on growth in display and classified advertising." Dudes, it rose in absolute terms. But of all the bad news for newspapers, the very worst is that Internet advertising revenue, the one hope for long-term salvation, is showing signs of slowing down on a sequential basis. If it is to save the day, this is

way

too early in the growth cycle for that. That is the operative issue.

The article also points out, rightly, that monthly numbers are just a "snapshot" but then goes on to say that

Dallas Morning News

publisher

Belo

(BLC)

recently announced it would stop providing the data because they don't inform shareholders of meaningful patterns.

Reuters

left it at that, but The Business Press Maven won't. It's never a good sign when companies start arguing against traditionally released data. Newspaper publishers had few problems with monthly numbers when they were good.

And this kicker, which was allowed to hang out there unchallenged, kicked The Business Press Maven right in the sweetbreads: "Lee and

Gannett

(GCI) - Get Report

, which reported a drop in newspaper ad revenue last week, partly blamed the declines on bad weather."

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;

click here

to send him an email.