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Technology Stocks : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (18392)	3/12/2004 12:49:12 AM
From: Hardly B. Solipsist	Read Replies (2) \| Respond to of 19079

The conference call was interesting, especially in illuminating that analysts can't do arithmetic. Ellison has been telling them at every call for years that even with flat new license revenues that revenues and margins will increase, and the analysts apparently never understand this. He spent a lot of the call explaining it at a level that even my 3rd grade daughter would get and it appears that a couple of people actually did understand by the end. In case you haven't listened to the calls, the point is that almost every customer who buys a license pays a continuing approx. 20% annual fee for support and the rights to upgrades. So even 0 new license sales would lead to (short term) constant revenues, and flat new license sales lead to exponential growth. Naturally you shouldn't extrapolate any of these things too far, but the point is that margins are improving largely because the subscription fees are increasing, and the marginal cost of supporting additional users is quite low. Most analyst reports that I've seen have said that margin improvement was all due to cost cutting that couldn't continue, but they also say that there isn't any growth to be had in database software -- these are probably the same sort of people that concluded that there was no market for copying machines and computers... This isn't the way MSFT sells operating systems, and so I guess that most analysts look at the slower new license sales for ORCL and conclude that this means that revenue growth must equal new license sales, but at least after this call a couple of analysts have a clearer picture. Anyway, if you are interested in ORCL you probably will find the CC worth a listen.