Oracle Corp. (NASDAQ:
ORCL) is scheduled to release its Q4 2010 results after the market closes on June 24, 2010. A continued improvement in the core business and strong execution on Sun is expected to enable ORCL to post a solid Q4. While checks on ORCL should be taken with reservation given its size, they indicate strength in BI, Edge Apps, and Database, as well as pent-up demand in ERP. BI and Edge Apps likely outperformed in the quarter. Increasing traction in Fusion Middleware and upgrades to Database 11g R2 is likely, and the three pronged product cycle is largely underappreciated. With a full quarter of Sun, margins could surprise favorably in Sun. Storage has likely outperformed, offsetting relative weakness in Unix servers.
Oracle Corporation is one of the world''s leading suppliers of software for
information management. The company develops, manufactures, markets and
distributes computer software that helps corporations manage and grow their
businesses. The company''s software products can be categorized intotwo broad
areas: Systems software and Internet business applications software.
As for the Q3 of 2010, GAAP total revenues were up 17% to $6.4 billion, while non-GAAP total revenues were up 18% to $6.5 billion. Excluding the impact of Sun Microsystems, Inc., which Oracle acquired on January 26, 2010, GAAP total revenue grew 7%. GAAP operating income was down 5% to $1.8 billion, and GAAP operating margin was 29%. Non-GAAP operating income was up 13% to $2.9 billion, and non-GAAP operating margin was 45%. GAAP net income was down 10% to $1.2 billion, while non-GAAP net income was up 9% to $1.9 billion. GAAP earnings per share were $0.23, down 11% compared to last year while non-GAAP earnings per share were up 9% to $0.38. GAAP operating cash flow on a trailing twelve-month basis was $8.2 billion.
Analysts' estimates for Q4 2010 range from a low of $0.49 to a high of $ 0.61, compared to a consensus estimate of $0.54, with number of estimates being 28 and the co-efficient variance 3.74. ORCL entered Q4 with the highest level of lic. backlog (12% of Q4 lic.) in 6 years. As such, the headwind from the stronger USD should be manageable in Q4 at ~1% of rev. guidance. ORCL should be able to meet lic./total rev. of $3.0B/$9.7B, with op. margins declining to 41% due to a full quarter of Sun, yielding EPS of $0.54 in Q4. Organic cc lic. growth may not decelerate from the 5% YoY in Q3. The guide for Q1 will likely bracket total rev./EPS of $7.1B/$0.34.
The stock closed at $23.09, down -0.47% on June 21, 2010 and most analysts' rate the stock as a relative Overweight with an average price target of $29.50. A solid Q4 and removal of the FX overhang post-earnings will be a catalyst for investors to be more constructive.
