Oracle Corporation: Forecast of Q4 Earnings

Includes: JAVA, ORCL
by: The Lonely Economist

Oracle Corporation (NASDAQ:ORCL), the world’s largest business software company, will release its fourth quarter and fiscal year 2009 results on Tuesday, June 23rd, after the close of the market. The company will then hold a conference call and live webcast at 2:00 p.m. PT/ 5:00 p.m. ET to discuss the financial results.

The company is expected to earn $0.44 per share, down from $0.47 per share the previous quarter.

The company ended its 3rd quarter with $8,211, in millions, in Cash and Cash equivalents which easily covered its immediate liabilities of $7,972, in millions. Oracle also held $3,083 in Marketable Securities and $3,025 in Trade receivables, in millions.

The company did provide some information concerning charges it expected to take in the fourth and final quarter of the fiscal 2009:

  • Expects to take an amortization charge of about $453 million.
  • Also expects to incur $195 million in restructuring charges.

If we look past the 3rd quarterly report and discuss its activities since then, we can observe that Oracle Corporation has continued with its acquisition program.

On April 20th, 2009, Oracle announced that it would be acquiring Sun Microsystems (JAVA) for approximately $7.4 billion, or $9.50 per share in cash. Although the deal is still pending and has not been completed, Oracle has already estimated that acquisition could add $0.15 to its earnings during the first year after its closing. It could contribute over $1.5 billion to its operating profit in the first year, and increasing to over $2 billion in the second year.

This acquisition is of particular interest to the industry because Sun Microsystems brings with it two very important assets: Java and Solaris, two very popular technologies. This acquisition will allow Oracle to become the leader in its industry. It will allow the company to continue growing.

Nevertheless, while this acquisition is good for its long-term future, in the short-term the company has had to battle a downturn in the economy. The company‘s customers are cutting back on their expenses and looking for more economical alternatives, but the company is most likely working to keep its customers and offering them service and products within their budgets.

If an investor is currently wondering whether they can try to run an earnings rally till Wednesday, they should consider that as of Friday’s closing bell, the company was trading at $20.66 which is near its 52 week high of $23.62. However, if the investor is considering buying the company’s stock and holding for a period of time then they should invest due to the fact that once Oracle completes its transaction with Sun Microsystems, its profits should increase as more customers pick Oracle for their combined software and hardware packages.


  • Strong beginning Balance sheet
  • Acquisition of Sun Microsystems, although still pending, is expected to increase revenue substantially within first year.
  • Customers cutting back expenses, but most still choosing Oracle due to its reputation
  • Stock nearing 52 week high, too expensive to buy just for an earnings rally
  • However, stock price is good for a long-term investment

Original Post

Oracle Third Quarterly Report Source: Oracle Investor Relations

Disclosure: No position