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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Rande Is who wrote (23798)	4/12/2000 11:43:00 PM
From: bob	Read Replies (1) \| Respond to of 57584

<< And the big ones like Cisco and ORCL are also very overvalued.>> Company Focus April 10, 2000 Volume 2, Number 15 Oracle Wakes Up the Corporate World and Wall Street Sleeps - Oracle Corporation By Tad Trantum, CFA Six months ago, Oracle's [ORCL: NASDAQ, $87.13 on 4/07/00] executive management outlined a plan for saving $1 billion in eighteen months through the internal implementation of Oracle's technology. These goals seemed but a pipe dream to most at the time, however, Oracle has executed above and beyond their goal, realizing $1 billion in savings with merely half of the implementation complete. Last week, at the Oracle analyst meeting, management's progress report was more than impressive, but in usual style, Wall Street failed to wake up and see the light. Yes, many of these analysts have "Buy" ratings on Oracle, but their analysis of the impact that Oracle is having on the corporate world was grossly understated and generally ignored. Enterprises of all sizes and shapes have eagerly opened their eyes and ears to the significant value proposition that Oracle is realizing and now offering to all that will listen. The following summary describes one of the most exciting corporate developments in modern corporate history. In the past year Oracle has improved operating margins from 19.6% to 31.4% through the fast and efficient implementation of a simple, complete information modernization solution: Oracle's plan to move from 40 to 2 data centers is only 30% complete. This translates into less hardware, software, people, buildings, and administration. In addition, Oracle is able to deploy new technologies more rapidly across its global infrastructure. Database consolidation provides real-time accurate information that can be accessed from anywhere. Reducing the number of mail servers from 97 to 2 (currently down to 7 mail servers) is creating a more simplified global Information Technnology infrastructure. The opportunity created by Oracle's technology to consolidate software, hardware, people, and buildings translates into cost reduction of more than 30% over two years and an IT headcount reduction of greater than 50% over the same time period. Customer service via the Internet combined with product simplification is allowing Oracle to slowdown the scaling of employees for customer support while accelerating the growth of the customer base. Currently, 30% to 40% of customer calls are serviced on the Internet, and the goal is to match Cisco, where 80% of customer support does not involve a human. Employee self-service costs have declined more than 50%. As a result, Oracle can reallocate the expense reduction to more value added investments like research and development. In fact, overall headcount growth has fallen from 20% in the first quarter of 1999 to a negative number in the most recent quarter, while research and development headcount growth has accelerated from 10% to 20% over the same time period. The rollout of customer relationship management tools is in the earliest stages for Oracle and has the greatest potential for cost savings over the next twelve months. Estimates for cost reductions have increased from $550 million to $1.4 billion, which is still conservative according to Oracle management. This is just a sampling of the transformation underway at Oracle. The "$1 billion cost savings story" has turned into the "$2 billion plus cost savings story" and is swinging the doors of CEO's offices wide open to Oracle. In fact, management admits to underestimating the power of this story in selling Oracle software. Oracle has not only discovered and developed a more comprehensive and effective software product for the end-to-end management of the corporate world, but they have set a standard for implementing and leveraging resources to rapidly grow a business. A more functional, simple, and complete solution with less people and lower costs is music to a CEO's ears. So, how long will it take to realize this kind of value for a company that chooses Oracle? Oracle's customers begin to realize the fruits of their investment within several months, whereas the implementation of SAP's [SAP: NYSE, $58.56 on 4/07/00] ERP software can take as much as three years, cost more than $1 billion and not even be Internet enabled. That is why more than 40 SAP customers have abandoned SAP in search of a solution capable of meeting their needs for competing in a world that is moving at Internet speed. Oracle has positioned itself as the pioneer of process, technology and cultural change in the New Economy. While Wall Street slumbers, corporations are eagerly embracing Oracle's value proposition in order to be more competitive in this dynamic and fast paced Internet world where sleep is not an option for those who play to win. Oracle Microsoft Seibel Peoplesoft I2 ROE (1-Yr Est) 47% 28% 24% 4% 14% P/E (Next Yr) 113 43 140 156 431 EPS Grwth (5-Yr) 40% 25% 54% 21% 70% P/E (Risk-Adj) 18 21 70 156 342 GRAD Points? 22 4 -16 -135 -272 Oracle has just begun to tap the demand for the full e-business solution. Management made several comments specific to the next couple of quarters that are an indication of Oracle's ability to leverage their leadership position well into the future: the current quarter's general business pipeline is showing 100% growth, the sales force has customers knocking down their door for Oracle's solutions, management referred to several blockbuster deals to be announced shortly, and the margin expansion still has a long way to go. Given the Oracle's bullish outlook and the level of technology investment spending, Wall Street is underestimating the future earnings power of Oracle based on the consensus growth rate of 26%. A 40% 3-5 year EPS growth rate is accurate representation of Oracle's opportunities. As a result, the risk-adjusted P/E of 18 measured against a 40% growth rate results in 22 GRAD Points?. Oracle over valued???? LOL!!!

To: Rande Is who wrote (23798)	4/12/2000 11:47:00 PM
From: redwood	Read Replies (2) \| Respond to of 57584

here's another good example i just saw on ts.com.....HOMS..price $23.5...market cap 1.76 billion...eps-2.56/share.....75 mil total shares....42.7 mil float....an finally the kicker is that in 2 weeks they will release 43 mil shares more!!....well at least the eps will go down<ggg>.....redwood

To: Rande Is who wrote (23798)	4/13/2000 3:04:00 AM
From: carol243	Respond to of 57584

Rande Glad you brought up stock valuations. I keep a fairly tight trading range for long term holds. My stocks I pick are between $20-$49 buys, based on broad range growth in their market, future plans, strong in their sector. An example is VSH, this has been a steady balanced company for a long time. I have bought many of the leaders during their momentum. I have followed your lead on which sectors come back into the market first, second, etc. I get caught up into the noise of the market and then you or another person will say something that brings me back to the basics. It helps to back off for a day to clear my mind. As I told you , last year April and May the market kept turning on a dime each week. Earnings, FOMC meeting, Rubin resigned,question of inflation, PPI,CPI,largest drop with internet stocks. Seemed like everyday something. On calendar my dog even shedding and the tree pollen junk falling from trees. I'm not skilled enough to predict what now is going to happen next, but if we do have an upward movement, it will be short lived, because CNBS hasn't even started on the Greenspan thing yet. Just wait until that starts. Fear sets in again for people. I'm going to make sure this years notes say to go on vacation April and May and make sure it's on a cruise without any television. Thanks again for sanity check, carol243

To: Rande Is who wrote (23798)	4/13/2000 8:02:00 AM
From: Knight	Respond to of 57584

Rande: Thanks so much for your very in depth response to my post. Thanks for reminding me that this is precisely why I belong to this thread. Someone else may have written my post off as that of someone who shouldn't be trading at all. But you took the time to share your knowledge and experience. Another nugget of stock info I hope others like myself will learn from. I know I will.Thanks Rande, Vickie