The technology sector was jolted when Oracle (ORCL) reported earnings results that did not meet its already lowered guidance. Oracle dropped over $3 to $25.77 when it reported on December 21 2011.
Jim Cramer, host of CNBC's Mad Money, ranked Oracle a "sell" when he mentioned the company as a stock investors might lose sleep over. Cramer favored stocks that pay good dividends, growth stocks and companies with a good product pipeline to look forward to.
|1||Oracle Corporation (ORCL)||Sell||12/20/2011|
|2||Apple Inc. (AAPL)||Buy||12/16/2011|
|3||Google Inc. (GOOG)||Buy||12/22/2011|
|4||Activision Blizzard, Inc (ATVI)||Sell||12/16/2011|
|5||Texas Instruments Incorporated (TXN)||Sell||12/19/2011|
|6||E*TRADE Financial Corporation (ETFC)||Sell||12/15/2011|
 Oracle experienced weakness from U.S., Europe and Japan. EPS grew 6% to $0.54 (non-GAAP), while free cash flow grew 45% to a record $12.6B. The company now has $31B in cash, or $7.87 cash per share.
Oracle's quarterly dividend of $0.06 yields just 0.90%. During its quarterly call, the company indicated weakness in its hardware business. Investors willing to pay a P/E of 14.82 would be bullish on its Exalogic and Exadata systems. The executives think that the business can grow by around 2.5 times.
The earnings disappointment for Oracle is a contrast to investors looking for predictability. Cramer suggested that  Apple (AAPL) and  Google (GOOG) will prove to be consistent winners. Cramer called both Apple and Google a "buy," but thought Apple lost some luster in recent months.
NPD reported that Apple's iOS market share was 29% for Q3, unchanged from Q2. Conversely, Android market share rose to 53%, up from 52%.
Cramer's bearishness on technology stocks extended to gaming stocks. He said that "the gaming group is no good," negative specifically on  Activision Blizzard (ATVI). The market saw the Zynga (ZNGA) IPO last week. Zynga peaked at $11.50, only to fall to $9.39 in recent days. Early venture capitalists already profited around 100 times from Zynga and other IPOs. This would imply that Zynga's shares are not discounted in today's market.
In the semi-conductor space, Cramer said that  Texas Instruments (TXN) was a "sell." Texas Instruments, whose shares will be moved from the NYSE to the Nasdaq exchange, already announced weak earnings and a weak outlook. Its negative outlook is consistent with the challenges for earnings growth in 2012.
In the online brokerage space, Cramer called  E*Trade Financial (ETFC) a "sell." E*Trade recently reported weak DARTs (Daily Average Revenue Trades). In November, DARTs were 141,361, down 10% sequentially and 11% year over year. In September, DARTs was 165,000. E*Trade brought in $600M in new accounts in November, and holds a total of $120B in brokerage assets.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.