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The Oracle Speaks, but the Analysts Fret

Thursday's meeting at Oracle's headquarters has a lot of folks biting their nails.

It's that time of the month to start worrying about



(ORCL) - Get Free Report

, the giant software and consulting company. Oracle's chief worrywarts -- the analysts who've been burned before when the company has disappointed Wall Street -- assemble today at headquarters in Redwood Shores, Calif. Judging from their tone Wednesday, the Oracle seers are anxious.

"We anticipate the product strategy discussions to be upbeat but believe that comments on the quarter may be more cautious," writes

Richard Sherlund


Goldman Sachs

, in a note to clients. "Management has previously commented that the pipeline is strong, but we believe that closing deals for the quarter remains the key issue."

New York-based Sherlund, one of the most influential software analysts on Wall Street, is referring to how Oracle let down investors in its third fiscal quarter by registering slower-than-expected revenue growth. (Sherlund rates Oracle a market outperformer.) In that disappointing quarter, sales executives failed to complete a handful of key deals in the quarter's last moments, causing revenue to come up light.

The day after the disappointing quarterly report -- March 12 -- Oracle's stock fell 23% to 28 9/16. Shares drifted lower, bottoming out around 21 in early April.

Considering Sherlund's caution, it's somewhat surprising Oracle's stock rose 50 cents, or 2%, Wednesday to 25 5/16, in heavy trading. The stock undoubtedly was helped by

America Online's


announcement that it would use software from Oracle subsidiary

Network Computer

in its new TV scheme.

Sherlund wasn't alone in damping the enthusiasm surrounding Oracle's analyst meeting, which, as usual, is closed to the press.

Michael E. Stanek

, software analyst with

Lehman Brothers

in San Francisco, notes that, "Oracle's consulting division has been caught (by no fault of it's own) in a transition," from big, enterprise-wide projects to nascent e-commerce assignments. (Stanek rates Oracle a buy.) More optimistically, Stanek advises that investors "continue to focus on the positive unfolding secular story and treat Oracle as a core holding coming out of" the Y2K problem that has dried up sales growth for numerous software makers. "If it melts down, then buy."


Salomon Smith Barney's

software team: "Although it appears that the company did have a very solid March, we do sense an air of caution emanating from high levels of the company." (Solly rates Oracle a buy.)

Oracle goes into its earnings quiet period Monday, which, coincidentally, is the beginning of the time it will be fighting ferociously to close deals before the end of its fiscal year.

Free Advice

Another perennial worry at Oracle is that President and Chief Operating Officer Raymond L. Lane will succumb to one of the many job offers he is rumored to be getting and leave founder and CEO Larry Ellison in charge of his own company. The latest whisper is that Lane will bolt in order to run CEO-less




Michael K. Kwatinetz, head of research for

Credit Suisse First Boston

and a longtime Compaq watcher, has a different idea: Eric Schmidt, the CEO of




Kwatinetz notes that as chief technology officer of

Sun Microsystems

(SUNW) - Get Free Report

, Schmidt was crucial in helping Sun focus on large businesses, known in tech-talk as "the enterprise." That, asserted the New York-based analyst dining on sushi in Palo Alto Wednesday, is precisely what Compaq needs.

"Compaq has to be driven into the enterprise space," says Kwatinetz, arguing that Schmidt's credentials as a strategist would fit Compaq's needs. "They're not going to win on the desktop."

I wonder if the new CEO would be receptive to using CSFB for investment-banking projects if Kwatinetz's job recommendation pans out?

Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a monthly column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at