Will Oracle (ORCL) Stock Be Affected By $10 Billion Bond Sale For Acquisition?

NEW YORK (TheStreet) -- Oracle Corp. (ORCL) is planning a $10 billion bond sale in seven parts to help finance the $5.3 billion purchase of Micros Systems Inc. (MCRS) that was announced last week, Bloomberg reports.

Proceeds will be used for general corporate purposes, which may include stock repurchases, dividend payments, refinancing of debt and acquisitions including the company's pending purchase of Micros, according to a regulatory filing.

The offering may include $1 billion of three-year and $750 million of five-year floating-rate notes, and the company may also sell $2 billion each of 10-year, fixed-rate bonds and securities due in 2019, sources say, according to  Bloomberg.

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Shares of Oracle are slightly higher at $40.60.

TheStreet Ratings team rates ORACLE CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate ORACLE CORP (ORCL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance and revenue growth. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, ORCL's share price has jumped by 33.21%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ORCL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • ORACLE CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ORACLE CORP increased its bottom line by earning $2.39 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($3.16 versus $2.39).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Software industry. The net income has decreased by 4.2% when compared to the same quarter one year ago, dropping from $3,806.00 million to $3,646.00 million.
  • Net operating cash flow has declined marginally to $4,456.00 million or 2.36% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: ORCL Ratings Report

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