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Technology Stocks : Oracle Corporation (ORCL)

ORCL 214.37

+3.2%

3:59 PM EST

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To: Michael Young who wrote (10104)	3/14/1999 1:51:00 PM
From: Benkea	Read Replies (1) of 19080

"H&Q reduced its earnings forecast for Oracle since it sees weakness in all areas of the business. Having been on the high side of consensus estimates, the brokerage has pulled its forecast slightly below the consensus-to $0.84 per share this year and a buck in fiscal 2000. This puts the shares at nearly 30 times forward earnings for a company whose business is decelerating." MSFT is expected to earn $2.68 (if you ignore quality of earnings concerns raised by their lowering of opp earnings by .08 to be made up on one-time gains - sounds kinda like a Japan IPO - doesn't it) vs. $2.29 trailing twelve for a forward P/E of 60 vs. a growth rate of 39% for a 54% premium to growth. CSCO is expected to earn $1.62 vs. $1.32 trailing twelve for a forward P/E of 61 vs a growth rate of 23% for a 165% premium to growth. DELL is expected to earn .74 vs. .53 trailing twelve for a forward P/E of 57 vs. a growth rate of 40% for 43% premium to growth. INTC is expected to earn $4.69 vs. $3.55 trailing twelve (which was a 9% DECLINE from the previous twelve mths in 1997) for a forward P/E of 25. Intel appears to be priced relatively well except $4.69 is only a 32% increase from 1997 (not 1998 levels). ORCL is expected to earn .84 (we will use H&Q's numbers since they are under consensus to be conservative) vs. .65 previous twelve for a forward P/E of 34 vs. 29% growth for a premium to growth of 17%. ORCL, INTC, MSFT and CSCO growth rates ALL declined in 1998 vs. 1997. However, ORCL sells at the smallest premium to growth of the bunch. ORCL's balance sheet, margins, and ROE are extremely competitive with the bunch. Bottom-line: ORCL is NOT expensive (might even be cheap) when compared on a relative basis to the valuations of the other tech leaders. That said, they are ALL EXPENSIVE since all of their growth rates are decelerating!

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