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

To: xiangheng xu who wrote (5503)	2/10/1998 9:47:00 PM
From: Andy Parham	Read Replies (1) \| Respond to of 19079

I think you are right. First of all the rise in share price here recently has been no where near as ridiculous as the previous descent - and when you realize this and also realize that you have missed out on $ that could have been made by and idiot then because of this - then you will cut your ear off to make yourself feel better.

To: xiangheng xu who wrote (5503)	2/10/1998 11:06:00 PM
From: mike zeltser	Read Replies (2) \| Respond to of 19079

From Barron's Online: February 10, 1998 Quirky Oracle's Latest Run May Stall By Lisa R. Goldbaum Some stocks always seem to defy expectations. When investors expect them to go up, they tank. And just when things look as bad as they can be, the stock is off to the races again. Case in point: Oracle Corp. Its stock has mystified and frustrated investors who have wondered why the reigning king of database software just can't keep pace with technology leaders like Dell Computer, Microsoft and Cisco Systems. Microsoft's stock, for instance, gained nearly 60% in 1997, while Dell's soared over 200% and Cisco managed nearly a 33% return for the year, keeping pace with the S&P 500. Oracle, by contrast, lost 20% in 1997. And the stock's gyrations have been as mercurial as its founder, Lawrence J. Ellison. Last April, the shares were languishing amid a product transition and overall weakness in the technology group. The stock then proceeded to take off, reaching an all-time high of 42 1/8 by last August, and it seemed poised to scale even higher peaks. But the party didn't last long. Almost immediately, the shares began to retreat, plunging a whopping 30% on December 9th, the day after the company reported weaker-than-expected earnings for the second quarter of its fiscal year ending May 1998. Oracle blamed the earnings shortfall on the economic crisis in Asia and weak sales to North American telecommunications companies. As if that weren't enough, Oracle was slapped with a lawsuit by angry shareholders who alleged that executives artificially inflated the stock price by painting too rosy a picture of its earnings and revenue outlook. Oracle executives vigorously denied the allegations -- and they were unavailable to comment for this story. Those accusations didn't stop the voluble Ellison (who sometimes seems to want to be the Ted Turner of the software industry) from telling investors at the NationsBanc Montgomery Securities Conference in San Francisco late last month that the company's database sales would grow by a hefty 25% year over year in North America. Remember, weakness in that core database business had been instrumental in the December earnings disappointment -- and the subsequent collapse of Oracle's stock. But investors appear more than willing to give Oracle the benefit of the doubt. After sinking as low as 17 3/4 in January, the stock has shot up nearly 54%. In fact, Oracle was one of the few stocks to advance Monday amid profit taking in the tech sector, as it gained 11/16 on heavy volume of about 16.6 million shares. While the Nasdaq closed modestly higher on Tuesday, Oracle gave back 7/16 to close at 27 1/4. But some industry pros say that investors who think Oracle's glory days have returned may be kidding themselves. "I believe that investors [in Oracle] are getting ahead of themselves," asserts Bert Hochfeld, an analyst at Josephthal & Co. Hochfeld contends that Oracle tends to attract portfolio managers "who want to own a big software stock that seems to be a leader." But he believes that Oracle is hardly a technology "leader" at this point. "The database and applications business in North America has been more difficult than you might anticipate," he notes. Why? While the woes of once-vital competitors Sybase and Informix continue to mount, pricing has gotten increasingly soft, as database-software products become more commoditized. To make matters even worse, competition from software behemoth Microsoft has become even more intense. Of course, Microsoft's SQL Server software is still considered by many industry experts to be inferior to Oracle's products. But that's never stopped Microsoft from winning in the past, and the company has the wherewithal to lower prices to grab market share, causing further margin erosion across the board. "[Customers] are using the prices of SQL as a club to beat over Oracle's head," Hochfeld argues. That's why he thinks Oracle will fall short of Ellison's stated 25% growth target for North American database sales. James Margard, chief investment officer of Rainier Investment Management in Seattle, is also skeptical. Margard said his firm recently unloaded its stake in Oracle, because he fears that the company is not yet "out of the woods" and that the stock has run up too quickly. He, too, worries about more fallout from Asia and Microsoft's potential impact on Oracle's database sales, noting that Microsoft is "targeting the database business in a serious way." Moreover, he's convinced that Oracle's disappointing earnings report last quarter has diminished the company's credibility. "You know the cockroach theory of earnings surprises -- where there's one, there's usually more," he quips. And at its newly inflated levels, the stock can't exactly afford more negative surprises. Oracle currently trades at about 25 times First Call's consensus earnings forecast of $1.10 per share for the fiscal year ended May 1999 -- a premium to its expected 22% growth rate for that year and about on par with its median projected five-year growth rate. But if Oracle can't deliver the earnings, what good are projections? With the memory of last quarter's earnings disaster still fresh in investors' minds, any more bad news could quickly send Oracle 's stock back on the downside of its current rollercoaster ride -- and make it even less likely that Oracle will again take its place among the technology leaders rather than the laggards. ------------------------------------------------------------------------ To subscribe for free email delivery of Weekday Trader, a Barron's Online exclusive. Click here. ------------------------------------------------------------------------ Return to top of page Copyright c 1998 Dow Jones & Company, Inc. All Rights Reserved.