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

To: MeDroogies who wrote (8934)	12/2/1998 12:59:00 PM
From: Tumbleweed	Read Replies (1) \| Respond to of 19080

Stock of the Day Dec 02, 1998 Oracle: Back on Track So Soon? In the fast-moving business of information technology (IT), product cycles are short and corporate customers demand the latest and greatest in speed, power and functionality, so when a company stumbles it often takes years to regain its stride. Oracle (Nasdaq:ORCL - news) is once again proving to be an exception. A year ago the company suffered a major slowdown in its core businesses and the stock was slaughtered. Now the company is upbeat on its future and the stock has surged 65% in the past two months. This isn't the first time Oracle has stumbled badly, only to recover stronger than ever and do it even faster than its fans anticipated. Its resilience is just one reason Oracle is considered a top-tier tech stock. The company continues to dominate the database market, but it has also evolved into a vertically-driven applications and service provider for enterprise computing. Oracle now fields a massive consulting and training force, solidifying its position in the IT marketplace not to mention providing a profitable and fast-growing business beyond the database and applications software areas. The services business has grown from less than $2 billion or 45% of revenues in Fiscal Year 1996 to an estimated $5.3 billion or roughly 60% of revenues this year. Other directions for Oracle include data warehousing, supply chain management (as part of its broader Enterprise Resource Planning initiative), e-commerce and Internet-based applications. The company recently launched Business OnLine, a revolutionary though untested way of selling enterprise software applications. Business OnLine is a web-based subscription service that enables mid-sized companies ($50-$500 million in annual revenues) to deploy ERP applications more quickly and easily than if they tried to install them on an in-house computing system. All the customer needs to access applications is a web browser. Oracle hosts the hardware, software and infrastructure. The appeal is obvious to anyone familiar with the cost, time and headaches involved with trying to implement a new ERP system companywide. This service won't be widely available until next year, and there's no telling whether it will catch on at all. But the variety of products and services rolling out of Oracle these days promise to stabilize its revenue and earnings growth trajectory, easing the pain when licensing revenues from its core database and applications areas hit rough patches like they did last year. And Oracle is indicating the database business is returning to a 20%-plus growth trend. The company recently rolled out its latest version, Oracle8i, which it calls "the database for Internet computing." This and other new product introductions such as web-enabled applications are expected to drive a reacceleration in revenue growth. The company is aiming to get back at a 25% to 30% growth rate in revenues and earnings. Analysts are looking for a 32% gain in earnings this fiscal year (ending May 1999), though comparisons are relatively easy due to last year's softness. Momentum in the services side of the business should carry the torch for the next few quarters, giving plenty of time for the new product introductions to sink or swim. A final issue that always arises when looking at Oracle is its preeminent position in the anti-Microsoft camp. Microsoft (Nasdaq:MSFT - news) has made strides in the low end of the database market, but Bill Gates & Co. have their share of distractions from the US antitrust case going on now. Furthermore, the recent merger/alliance of AOL (NYSE:AOL - news) , Netscape (Nasdaq:NSCP - news) and Sun Microsystems (Nasdaq:SUNW - news) appears to give the anti-Microsoft contingent some momentum, which should benefit Oracle if for no other reason than a strengthening market for non-Windows computing.