Oracle Shares Up on Analyst's View
Wednesday December 11, 5:16 pm ET
PALO ALTO, Calif. (Reuters) - Shares of Oracle Corp. (NasdaqNM:ORCL - News), the world's second-biggest software company, rose more than 5 percent on Wednesday after a Wall Street analyst said the company could report better-than-expected license sales next week.
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The analyst, Lehman Brothers' Neil Herman, also said Oracle's results could point to a return of more typical seasonal buying behavior, which before the current spending downturn had commonly led to stronger year-end sales at software shops.
Oracle shares closed up 60 cents, to $11.30, on the Nasdaq, but remain off their 52-week high of $17.50. The analyst forecast helped boost technology stocks and the market at large, which rose for a second day on Wednesday.
Oracle is expected to post its seventh consecutive quarter of year-on-year revenue declines on Dec. 18.
The Silicon Valley company's fiscal second-quarter forecast calls for a per-share profit of 8 cents to 9 cents, compared with 10 cents a year earlier, on total software license sales that are down 10 percent to 15 percent.
Herman said his "best guess" is that Oracle will deliver total software license revenue of around $725 million to $735 million, closer to the high end of the company's forecast.
Herman also said he "wouldn't be surprised" if Oracle's key database license revenues came in "significantly better" than his firm's forecast of $544 million, a 15 percent decline from the year earlier.
He currently is projecting total software license revenue of $699 million, including other revenue of $16 million, and earnings of 8 cents a share.
"We expect (Oracle) at a minimum to hit our (earnings per share) and revenue estimates," Herman said.
Herman noted he is getting signs that point to a potential seasonal uptick in Oracle's revenues and a possible stabilization of business in the United States, where corporate spending has been limp for about two years.
"It has been so bad for so long, it may well be hard for business to continue to deteriorate in the U.S. market," he said.
The analyst said he would not be surprised if some of Oracle's sales slipped out of the August quarter and were closed in its second-quarter that wrapped up last month.
Oracle typically experiences a seasonal pickup in business during the November quarter, compared with the quarter ended August, he said.
"Although we expect a weaker than normal budget flush in the fourth calendar quarter, we believe that Oracle has felt some of the positive impact of that phenomena," Herman added.
He attributed most of that uptick to pent-up demand, rather than to companies spending to deplete budgets.
"We continue to receive consistent industry feedback that overall the months of October and November for the software industry have been better than the September month, which was quite a disappointing month for much of the software sector," he said.
Link:http://biz.yahoo.com/rb/021211/tech_oracle_stocks_4.html |
