Analysts Cheer Oracle's Joint Venture With Ford, E-Business Deals
Dow Jones Online News, Wednesday, November 03, 1999 at 15:06
By Marcelo Prince, Staff Reporter
NEW YORK -(Dow Jones)- Oracle Corp. stock has been red hot lately,
climbing 27% in the past five trading sessions, as the positive momentum
surrounding the database-software maker's Internet push continues to
build, analysts said.
On Wednesday, Oracle (ORCL) shares continued their ascent, setting a
new 52-week high of $57.75, past the previous high of $53.875, set
Tuesday. In afternoon dealings, the stock was up $4.063, or 7.7%, at
$57.063, on volume of 18 million shares, compared with average volume of
12.6 million.
Several analysts issued glowing research notes Wednesday cheering the
Redwood Shores, Calif.-based software firm's joint venture with Ford
Motor Co. (F).
Tuesday, Oracle and Ford said they would create AutoXchange - a new
company that will manage Ford's $300 billion extended supply chain over
the Internet.
AutoXchange, which will be majority owned by Ford, will be run by
Oracle using its software and is expected to generate as much as $1
billion in revenue within 18 months, Oracle President Ray Lane said
Tuesday.
Lane also said Oracle is working on signing similar joint ventures in
other industries.
Analysts said the deal - and the potential for others - showcases
Oracle's e-business potential and its transition away from the less
flashy enterprise resource planning, or ERP, market.
Salomon Smith Barney analyst Neil Herman reiterated his "buy" rating
on Oracle, saying the deal "strongly validates Oracle's e-procurement,
supply chain, and Business Online technology and should help generate
future software sales."
Herman said the joint venture, which is slated to start up in the
first quarter of 2000, could generate $300 million in revenue in 12
months. Oracle and Ford would split any profits from the venture
relative to their ownership stakes.
Volpe Brown Whelan & Co. analyst Steve Abrahamson, who also
reiterated his "buy" rating, said: "The AutoXchange announcement clearly
adds momentum to Oracle's e-business story, possibly at the expense of
SAP, i2, Ariba" and other competitors.
When asked about the stock's recent rise, an Oracle spokeswoman said
it was precipitated by a positive research note by Merrill Lynch & Co.
on Monday and continues on the heels of the Ford pact.
"People are starting to realize Oracle is the software for the
Internet," she said. "Just as Cisco is the plumbing, we're the lifeblood
coursing through the veins."
Advest analyst Edwin McClendon, who also reiterated his "buy" rating,
agreed, saying, "They have done an excellent job of associating
themselves with the hottest business software prospect - the e-business
application space.
"They never got fully tarred with the ERP label," he added, "They've
presented themselves as an Internet software play and that is getting
more and more into the multiple."
McClendon also said as Y2K nears, investors are starting to look past
its potential problems and focusing on the positive outlook for Oracle's
database management business, which is expected to see revived demand in
the remainder of 2000.
Also Wednesday, Credit Suisse First Boston's Wendell Laidley
reiterated his "strong buy" rating on Oracle.
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