Oracle (ORCL) is the number one Application Server vendor with a market share of 40.7%. LAD was the fastest-growing segment for Oracle the growth rate of 27.6%; next was APAC at 11.4%. Obviously the company is doing well because it beat out competition by gathering over nine points more in market share from its closest competitor. There are reasons for this, and one of those reasons has to do with speed because of the culture we live in where customers are used to getting information in seconds and if a company can't perform quickly people lose patience. Let's take a look at how the company maintains this speed as an edge over competition.
I am amazed how business has changed over the years! Today, it's not as simple as having a product and selling it as companies pursue things like: Big Data, social business, mobile applications, private clouds, real time analytics and customer experiences. Gathering all this information is one thing, but organizing and being able to perform as the information is delivered to the business is another thing altogether.
This is today, but companies always need to be forward-looking in order to try to keep a competitive edge and deliver high-quality care and service to its clients both now and in the future. Oracle maintains leadership by addressing this issue for its customers and has just introduced computers that perform faster than any other systems in the world because they fuse software and hardware together, which delivers "cost performance" unlike anything else.
Often businesses need to move quickly, capturing and analyzing massive volumes of data and acting upon it as quick as they can to engage customers in ways customers demand. In an age where we can walk around with our mobile phones and bring up anything we want in seconds, we expect the same from businesses or we get disappointed. This has dramatically changed the way old-fashioned IT systems originally were engaged to work. Oracle is a leader in this industry because it knows how to help clients stay in front of the game.
The company's performance is based upon what it calls "the ultimate optimization." It continues to move many of its features that are presently in database, Java, middleware and applications into silicon and hardware. Going from what it calls "software on silicon" this is the first time it has done it for database or Java and this is why it believes it is going to be able to double performance over and over and maintain the industry lead. The ability to do this is attributed to the company's acquisition of Sun Microsystems. Engineering hardware and software working together, yields benefits in performance, reliability and lower costs due to lower power consumption.
Oracle has continually been rewarded by investors because of its earnings growth and this has led to healthy growth until the gap down toward the end of March. But analysts still believe the company has great upside potential. The pattern of positive earnings it has shown over the last two years is expected to continue and this year the market expects earnings to rise to $2.69 versus $1.97 in 2012. If we compare Oracle to the software industry as a whole, its net income growth and return on equity is a bit better than the industry average. For this reason the company continues to perform well and look healthy.
Example of How Products Help Customers
Sun Direct is a "direct to home" competitive business in South India. It has about 8 million subscribers and uses MPEG4-based technology, which increases its broadcast capacity and also offers high-definition channels for its customer base. To separate from its competition it needed to optimize its billing operations as well as create new bundling abilities. It uses "Oracle Communications Billing and Revenue Management 7.5" to upgrade with and here's what the company improves its ability to do:
- Enhance its product offerings, which included monthly process rated services into daily payments as well as multi-month plans.
- It increased its average revenue per user as it optimized its accounting system with customer service plans. This resulted in a significant revenue increase during the first two quarters that the system was used.
- Customer turnover decreased as the company provided a grace period for satellite service payments and it also improved service affordability across multi-income levels.
Customer service and care was enhanced because it was able to integrate the customer's purchase history with the customer care application. This enabled the provider to customize future service offerings and adapted to each customer's need.
After the big dip the company took toward the end of March, it has been moving up in a typical peak and valley trading channel. I will be interested to see if the stock will now move above the last peak because it bounced off a very strong resistance level. If it pushes through there I believe it might be able to continue to move up. If not then I think it will either move sideways or move back down. Even with that last move up the RSI indicator continues to show weakness as the highs continue to get lower. I also would like to see the MACD indicator rise above the zero line but the recent high hasn't, so we shall see if the stock has enough strength to keep moving up.
Since mid November the tech sector (XLK) has continued to do well and has yet to show any signs of a turnaround so I cannot say that the sector as a whole can influence Oracle's move down. Short term I don't know if the stock will push through this very strong resistance level or not we will have to wait and see the long term I still think it is a very good investment because it will continue to lead this industry.