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Oracle ( ORCL)

Company Profile: Oracle develops, manufactures, markets, distributes and services database and middleware software as well as applications software designed to help its customers manage and grow their business operations.

1-Year Total Return: +44%

Schoenstein's Take: Much like Microsoft, Oracle is a play on the IT space for the Jensen Portfolio. Oracle has a portfolio weighting of 4.2% and, like Microsoft, is attractive on the idea that there is pent up business spending that hasn't taken place, Schoenstein says.

"Oracle is a business where there is a high switching cost," he says. "Once you've made the commitment to go to an enterprise system that is Oracle-based, it's very difficult to then take that system out and replace it with a competitive product. You're then in a recurring or renewal cycle. Oracle gets the initial software license and then a recurring revenue stream that is a benefit."

Oracle's move towards offering customers an all-in-one solution makes the investment more attractive. With the acquisition of Sun Microsystems, Oracle has begun to expand from software into hardware.

"Combine that all together and it's the idea of a solution in a box," Schoenstein says. "It's the all-in-one solution, everything from the hardware to run the applications to the applications themselves to then the upgrades you get from the recurrence of those applications. You have the whole platform available to your customers. When you have that much entrenchment, that installment and recurring revenue stream, that will be very difficult to take out. They just want Oracle to be the application of choice. That's a pretty attractive proposition."

-- Written by Robert Holmes in Boston.

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