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Technology Stocks : Oracle Corporation (ORCL)
ORCL 164.64-2.6%3:59 PM EST
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To: MeDroogies who wrote (8564)10/6/1998 3:22:00 PM
From: Reginald Middleton  Read Replies (2) of 19080
 
<Actually, selling assets is a good move in the current economic situation. If you assume that currencies are devaluing, and that inflation is either non-existent or switching to deflation (both currently popular beliefs), then holding assets is not in the best interests of the company.>

That is highly contingent on exactly what those assets are and what use the company has for them. For instance, if the company sold the intellectual properties rights to thier Oracle 8i code with no recourse, they would have bolstered thier cash reserves but damaged thier long term strategic perspective. Since I do not know what assets were sold (didn't bother to check), I definitely can not agree with your statement.

<It not only improves the earnings sheet, but allows the company to hold cash in an uncertain environment. Not a bad move at all.>

You see, this is a problem that I (and the market as well) has with earnings. Certain companies sell assets to generate cash flow but fail to segregate it as non-recurring or non-operating revenue. This amounts to fudging operating results. I did not check to see if ORCL bothered to segregate the cash generated from assets sales, but in hard times, it would not surprise me if they forgot to do this. NSCP tried this a couple of quarters ago and got busted. Everytime this happens, you can bet the ranch on the market devaluing the company in the near to moderate term.

RCM
rcmfinancial.com
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