SMARTMONEY.COM: Another Rosy Prediction From Oracle
One-Day Wonder
By Lawrence Carrel
Of SMARTMONEY.COM
- -----------------------------------------
Oracle Corp. (ORCL)
- -----------------------------------------
Share price as of Tuesday's close: $15.75
Share price now: $16.73
Change: 6.2%
Volume: 104.8 million shares, daily average 39.2 million
shares
Last time this high: Aug. 7, 2001
52-week high: $35.00
52-week low: $10.16
Forward P/E before announcement: 33.5
Forward P/E after announcement: 35.6
- -----------------------------------------
IT'S LIKE DEJA VU all over again.
On Wednesday, Oracle (ORCL) shares jumped 6% on optimistic
comments from Chief Financial Officer Jeff Henley. Late
Tuesday, during a Webcast from the Morgan Stanley Internet
Software and Networking Conference in Phoenix, Henley said
the world's No. 2 software maker is upbeat about 2002 and
is sticking by the guidance it issued Dec. 13. Back then,
Oracle said business had bottomed out, and that it expected
earnings for the third quarter, ending Feb. 28, to match
the 10 cents a share it earned in the year-ago period.
Positive news from SAP (SAP), Oracle's rival and Europe's
largest business software maker, and a stock upgrade from
Thomas Weisel Partners to Buy from Market Perform added to
the euphoria.
Funny, but this sounds a bit familiar. In December 2000,
amid slowing growth in the PC market and wider concerns
about the entire technology sector, Henley waxed oblivious.
"Not all tech companies are the same," he said. "We're in a
sector much more immune to economic concerns."
Henley forecast a 20% to 25% increase in database sales for
the third quarter of 2001 and an 80% surge in application-
software sales. And Oracle executives continued to make
upbeat presentations until the quarter ended. Then those
same executives sheepishly admitted that a sputtering
economy had hurt sales and that the company would miss
third-quarter expectations. They said they'd been
blindsided by the sudden negative mood among customers,
which had caused several deals to be deferred at the last
minute.
We're not saying Henley's got it wrong this time. But a
little perspective never hurt anyone.
Quote
"The (stock price) run-up appears to already build in the
possibility of positive earnings results as well as
possible positive outlooks for future quarters," wrote A.G.
Edwards analyst Mary O'Rourke Werner in a note dropping her
rating to Hold from Buy. "We do not feel the growth and
value created by this turnaround and expected continued
improvement through 2002 is enough to warrant purchasing at
current prices." |
