Why Oracle May Be A Great Stock, But Maybe Not Right Now

Sep.30.13 | About: Oracle Corporation (ORCL)

Oracle (NYSE:ORCL) is a perfect example of the power of partnerships.

Sometimes, this means strategic alliances developed with fellow tech giants, which love to share that Oracle hardware and software makes their infrastructure secure and dependable.

For example, as of this week, Dell (NASDAQ:DELL) proudly informed customers that they can buy or renew Oracle software support services directly from Dell, which is much more convenient than going elsewhere for these products. Canon (NYSE:CAJ) also has used Oracle software and databases in its printer and copier systems.

In other cases, a small business may easily become one of Oracle's 400,000 customers with much less fanfare, since solutions for all levels of business is what Oracle has really been about for more than 30 years.

These days, Oracle has gone beyond the basic database software and boxes with wire, products it has been known for, and is now beginning to explore cloud technology for storage and other applications. While the cloud isn't new ground for smaller, newer online solution providers, the cloud is unexplored territory for Oracle.

In fact, how it performs in this world, and against competitors who have been involved in this sector a little longer, may make a difference between selling now and holding onto the stock to see what happens.

Riding things out is the advice of Leah Frakes, which said that Oracle stock can be downright risky, at least short-term. It does have some new initiatives that have just been launched and a very solid track record of service, database management and easy integration with other technologies.

But the new cloud venture, an increasing focus on hardware manufacturing and design and generally moving out of its comfort zone can all undermine investor confidence in the company, which has been performing poorly in the last year.

On paper, the company isn't completely bullish, saying its limited experience with hardware may "create additional challenges" It also says other unknowns in this relatively new world can include everything from new products from competitors, government action and international demand.

In person, however, everything was coming up roses, judging from the energy at this week's Oracle World.

More than 60,000 customers and supporters either visited San Francisco or tuned in remotely to the annual upbeat gathering of customers and supporters, which is a chance to learn data integrating business products, and a sneak peek at upcoming initiatives.

This year, audiences heard about cloud-based updates to the Customer Experience program, which offer improvements in mobility, interactivity, commerce and social interaction.

Customers can access these new packages through smartphones or tablets and gain a better idea of customers and customer preferences. The package even includes improved analytics and 100 ready-to-use apps to boost marketing efforts.

Oracle also announced an Identity Governance program which will streamline the access process for companies which require more secure solutions for users. In the past, companies with high internal security systems sometimes require multiple levels of certification before granting access. This is faster and easier to retrieve, and is considered the most thorough program of its kind.

Another innovation is the ability for Oracle to "push" updates to its products to its own cloud (the Enterprise Resource Planning Cloud), a tool that makes it easier and convenient for customers to access.

Though CEO Larry Ellison skipped his traditional Oracle World keynote address to watch Team America in the America's Cup sailing event, earlier in the week he shared details about the new in-memory system, which is able to save data on memory chips instead of disk drives. The chip databases are 100 times faster than traditional databases, which he said will be ideal for faster data retrieval, analytic data and inventory control.

Oracle watchers expect even bolder predictions and innovative new announcements as Oracle World continues. But even the good stuff hasn't impacted share prices significantly - shares were down to $32 at the beginning of September, and just touched $34 recently. Its low point in the last year was only $29 last November.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.