It may finally be two in a row for Oracle ( ORCL).

Even as its PeopleSoft ( PSFT) crusade has hurt its stock price, Oracle finally may post its second consecutive quarter of solid results Thursday after a rollercoaster ride of bad quarter after good. That's the consensus on Wall Street, which looks to Oracle's results as an industry barometer since they come out a month before its peers' earnings.

"Everyone's going to be hanging on Oracle to see whether software businesses in general are starting to pick back up," said Rich Parower, co-manager of the Seligman Global Technology Fund. An in-line report should be viewed "pretty positively," he said, though it still could generate a bit of a software selloff. (His firm doesn't hold Oracle shares.)

Oracle shares bucked the tech slide Wednesday in advance of its earnings report, with shares closing up 10 cents, or 0.8%, at $12.41. Oracle shares, however, have gained only 11.3% in the past year, significantly underperforming the nearly 53% surge in the Nasdaq Composite in part because of the company's controversial hostile bid for PeopleSoft.

In part because of the PeopleSoft drama, the stock is trading at about 25 times the consensus estimate for fiscal 2004 earnings and 23 times '05 earnings, the low-end of its peer group. The benchmark P/E ratio for software companies is typically about 30 times forward earnings.

The world's second largest independent software maker has stumbled in each of the past two fiscal third quarters, which end in February. But this year should be different as technology spending shows more signs of life.

Oracle's guidance calls for third-quarter earnings of 11 cents to 12 cents a share on revenue ranging from $2.47 billion to $2.54 billion, representing a 7% to 10% top-line increase from a year ago. Oracle's broad outlook for license revenue called for an increase of between 5% and 15%, or between $780 million and $854 million.

Analysts are expecting Oracle to deliver the high end of those numbers, with earnings at 12 cents a share on $2.51 billion in revenue, according to Thomson First Call. The average third-quarter license estimate of 11 analysts was nearly $839 million.

The quarter also may be noteworthy as a stepping stone toward Oracle snatching back its No. 2 position in the applications market from PeopleSoft, which leapfrogged ahead when it acquired J.D. Edwards last year.

"The myth is PeopleSoft is this really successful applications business and Oracle is this gigantic failure, but it's just not true," said Rob Tholemeier, an analyst with DRW Research in New York. "I think the applications business in the fourth quarter could really be mind-boggling." Tholemeier predicted Oracle's applications side will top PeopleSoft's in the fiscal fourth quarter.

Ever since Oracle first courted PeopleSoft last June, financial analysts have been saying German behemoth SAP ( SAP) should gain even more share as a safe haven while Oracle and PeopleSoft's futures remain up in the air. But market share figures barely changed in 2003 from 2002, according to AMR Research. The firm found SAP's share actually edged down to 36% in 2003 from 37% in 2002, but remained roughly three times the 11.6% share of Oracle and 12.5% share of PeopleSoft and J.D. Edwards combined.

Oracle has won some deals over SAP, but a net loss of multiple deals to SAP in Oracle's February quarter may have prevented what could have been very strong applications results, First Albany analyst Mark Murphy wrote in a note last week. Still, he's forecasting a 7% year-over-year increase in Oracle's applications business, which he believes has stabilized and benefits from easy comparisons and currency exchange rates. (Murphy has a neutral rating on Oracle and his firm hasn't done banking with the company.)

Despite the spotlight the Oracle-PeopleSoft fight has shined on the applications market, about 80% of Oracle's revenue still comes from its database business. So that's where Loomis, Sayles & Co. analyst Tony Ursillo said he'll be focusing his attention when Oracle reports third-quarter results. He's interested in seeing whether Oracle's recently launched 10g database (g stands for grid computing) has given the company a lift out of the gate.

In addition, Ursillo noted that Oracle's databases should prosper as the applications market picks up because they run under the majority of applications. Consequently, the database business may be a better barometer of the software market than Oracle's smaller applications business, noted Ursillo, whose firm holds Oracle shares.

And as always, the company's guidance for its historically big fiscal fourth quarter will be key. Merrill Lynch analyst Jason Maynard wrote Wednesday, that a forecast calling for year-over-year fourth-quarter license revenue growth in the single to low double-digits would be well-received by investors. (He has a buy rating on the stock and his firm has done banking with Oracle.)

Analysts currently are forecasting Oracle's earnings will jump two pennies from a year ago to 18 cents a share in the fourth quarter, with total revenue up 8% year-over-year to $3.06 billion.

Ursillo noted that Wall Street has punished such tech companies as Texas Instruments ( TXN) and Intel ( INTC), which have issued guidance in the past couple of weeks. "I think it's going to be key to see not only what strengths do they Oracle imply with the guidance, but what do people think about it," he said.

The hope, of course, is that bellwether can extend its streak to three quarters in a row.

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