By Craig Bowles
Oracle Corporation (NASDAQ:ORCL) is slated to report 4Q 2014 earnings after the bell on Thursday, June 19th. The earnings release is expected at approximately 4:00 p.m. EST with a conference call and live webcast available at Oracle Investor Relations. Oracle is the second largest software maker by revenue, after Microsoft. Given its size and influence, the reaction to Oracle's earnings can have a meaningful impact on other markets, including the S&P E-Mini Index Futures & NASDAQ E-Mini Futures.
Outliers & Strategy
- Non-GAAP Earnings Per Share: The Street estimate is $0.95 (range $0.93 to $0.97) (Yahoo! Finance).
- Revenues: Revenues are seen rising 4.9% y/y to $11.48 bln (range $11.36 bln to $11.62 bln).
- New Software Licenses and Cloud Software Subscriptions Revenues: Analysts expect 4.7% y/y to $4.224 bln, according to Zacks Institutional Services.
- Oracle insiders reportedly sold 3,612,490 shares over the last six months. (This number doesn't include $70 million of sales at the beginning of April which included President Mark Hurd's selling 500,000 shares. Sales have continued, so total sales may be more than 6 million shares.) The company increased stock buybacks from $10 bln to $12 bln last June, so the month is in focus for another announcement. Before 2012, buyback announcements were in October and December, however.
- Oracle results could impact software developers, such as Microsoft (NASDAQ:MSFT), CA Technologies (NASDAQ:CA) and International Business Machines (NYSE:IBM).
- Oracle shares have a 1-day average price change on earnings of 4.79%. Options are pricing in an implied move of 4.42% off earnings.
- 06/10 Oracle released a new In-Memory database system that allows customers to process business information faster in real-time. The system has the speed of memory with disk-like capacity.
- 06/5 Analysts have 16 Buy ratings, 12 Hold, and 2 Sells, according to a post on AnalystRatings.net.
- 05/13 A U.S. appeals court appeared skeptical on Tuesday about reinstating a $1.3 billion jury verdict won by Oracle Corp against SAP, in a case where the European software company admitted massive copyright infringement, according to a post by Reuters.
- 05/09 Oracle won a big victory over Google (NASDAQ:GOOG) (NASDAQ:GOOGL) in which Oracle accused Google of stealing its intellectual property by using elements of Oracle's Java programming system to create Google's popular Android mobile software, summarized by San Jose Mercury News.
Oracle's uptrend is decades old and pullbacks have only occurred after moves above trend. The stock shows limited downside since last summer after two years of sideways action, so the bulls have enjoyed a breakout. The last month consolidated between $41.50 and $42.20, so either direction out of this balance area has potential. Bearish news would target previous balance areas beginning at $40. Bullish news would have the stock hitting more new highs. Current levels are testing the dot.com peak. (Chart courtesy of StockCharts.com)
Oracle is another company supporting their stock with increased share buybacks. Shares are challenging the tech boom highs. Analysts are relatively neutral despite the stocks steady rise since the first half of last year following two years of consolidation. The company doesn't normally blow away estimates and the stock tends to act favorably after beating estimates. Analysts expect earnings at $0.95 on revenue of $11.48 bln. Traders think that's a bit optimistic, although you wouldn't know it by looking at the stock price, so meeting estimates might be viewed as a positive. Being the biggest quarter for new license revenue and cloud software subscription revenue makes the estimate of $4.224 bln more of a focus than in other quarters.
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