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

To: Gary Ku who wrote (5707)	2/28/1998 10:10:00 AM
From: seth thomas	Read Replies (5) \| Respond to of 19080

>> Well established companies don't leak any earnings information before its release. The moderate dropping of share price before earnings release is predictable. Officially, yes. But how many hundreds or even thousands of employees know what's going on? They can tell if deals are closing, how much pressure is on them just before end of quarter, how the sales reps are doing, general trends, etc. You think that doesn't leak out? People tell/give hints to wives, friends, other employees, maybe a personal financial planner who knows people in NY, and then it's all over town. >>Ellison said late January that ORCL's third-quarter database sales would grow 25% year over year in North America. a) Larry says a lot of things. For example, last year, Larry said IFMX was not a viable company and would soon go under. b) At first he said the company overall would grow 25%, then Ray LAne "explained" it to mean database sales in North America would grow 25%. Think about how narrow that statement is. Strictly speaking, database sales are about 1/3 of ORCL revenue (application products, consulting, maintenance, training are about 2/3). North American revenue is about 48% of overall revenue. So, what we are getting is a statement that 1/3 of 48% will grow 25%. In round numbers, that means an overall growth impact of 2 or 3% at best. Figure a little more slowdown in Asia, maybe some currency trading problems, and boom - you've got zero growth. My point is that many investors, analysts and brokers heard "25% growth" and are expecting that for the company. If ORCL comes in with overall 10 or 20% growth or less - the stock will get slammed hard - back to 18. No growth - you'll see 15, just on emotion. Then you'll see more bad press and customers get nervous. ORCL loses more credibility. Of course the company is viable and strong. I've just been saying that the expectations were set very high, and they won't meet them. The result - a big drop in the next 2 - 3 weeks.