My last post for a while -- Xmas vacation starts soon!
My views are unchanged versus my previous posts on the ORCL, CSCO,
and MSFT strands: 35% long-term growth, still on target; P/E in
the 40s is, er, extremely high. Break down the the 35% any way
you like. It's true that Europe's been slow the past two quarters.
I'd expect that to change for the better, but then, something else
might get worse. Be sure the first-rate management team is on it.
Re. database revenues, 25% is low, but then, apps made 77% (118%
in the USA). The 42% database growth in previous quarters was
unexpectedly high, while apps revenue for Q1 was unexpectedly flat.
This is a large, diversified business, and you're seeing
diversification in action, eh? Again, as I've said before, the
high-end database business is very solid, despite the noise IFMX
is making right now (reminds me of SYBS noise 5 years ago).
The market always likes to at least pretend there's competition.
I expect Oracle 8 to be a smashing success, and for IFMX to fade.
The real competition will be from NT and SQL server. Today they
pose a threat to margins on the low end, and this threat will grow
over the next two years, especially once P7 brings 64-bit
capabilities to Wintel servers. ORCL management recognizes this
and is busily growing up higher value-added parts of the business
(e.g. applications, consulting). And, since the best defence
is a good offence, the company is pushing the NC concept, Java,
and it's NCA vision aggressively, with considerable success
(seen a Web TV yet?).
If the stock falls any further I will use the chance to buy back
some of the January calls I wrote when it was peaking (alas, these
haven't fallen as much as I'd like). If I don't get the chance,
I will lose some stock in January and will be looking for a chance
to reaquire at lower prices. I have not changed my price targets
of 45 in January, 52 for June, and low 60s for Dec/97.
As a bonus, I'll add that re. MSFT, I've thrown in the towel
attempting to keep my model intact. My long-term growth estimate
of 25% remain until disproven; with a P/E now in the 40s, there's
no way I can make it fit the model. My price target of low 70s
by year's end was blow out a month ago, and my Dec/97 price target
of 90s looks likely to fall in the first quarter of calendar 1997.
Good thing I bought back my covered Jan 150s before the surge to
current levels or I would be losing some MSFT shares. Used the
recent surge to close the short Jan 115 puts at a nice profit.
I'm simply waiting now for it to pick a direction -- sigh.
I have no position in any other stocks at this time. As always,
invest at your own risk. Good luck, and Happy Holidays! |
