Since Oracle (ORCL) is still taking the proper measures to continue the growth of the company and its stock price, I expect the relatively stable growth from the past decade to continue, and I think Oracle is a sound investment.
Oracle Chief Executive Officer Larry Ellison announced the release of the software company's extensive collection of software tools and applications onto a new internet "cloud," in an attempt to increase growth and keep up with its main competitors. Oracle Cloud, as the service bundle is called, has been in the works for almost 7 years according to the CEO.
Ellison claims Oracle Cloud will be "the most comprehensive cloud on the planet Earth." Oracle Cloud is said to be a platform for both software tools, platform services, and it even includes a social network application aspect. This venture has included company acquisitions, along with the innovation and engineering of over 100 standards-based applications for the services offered on Oracle Cloud.
I believe Oracle will see an increase in stock prices stemming from increased valuation of the company due to the release of Oracle Cloud. Oracle's presence in cloud computing is a significant opportunity that has not been capitalized on by main competitor SAP (SAP). However, cloud computing is not an entirely wide-open industry. The technology giant Google (GOOG) was one of the first companies to enter into cloud computing, with its release of Google Docs, which allows users to work on documents from wherever they are, no matter what internet device they are using.
While competitors do exist in both cloud computing, and of course in the entire technology sector, I think it may be a smart move to invest in Oracle now, before its value and stock price reflect the release of Oracle Cloud and its expansion into other cloud computing companies.
One acquisition that will allow Oracle to gain substantial online presence via cloud technology is the signed agreement for the acquisition of Collective Intellect. Collective Intellect's cloud-based software allows for companies to monitor and respond to conversations taking place on social networking sites like Facebook (FB) or Twitter. This is one of many acquisitions made by Oracle to increase its online presence, and improve its Cloud-based service.
Oracle also acquired Vitrue, which is another cloud-based company, to further improve its online portfolio and embrace cloud computing. While Collective Intellect is used to monitor information from and interact with online users, Vitrue focuses on online social marketing. Vitrue offers a social marketing platform that allows companies to create, publish, and monitor social marketing campaigns.
These acquisitions are expected to eventually create the most developed and complete business-consumer social relationship platform. This advanced social relationship platform will allow companies to create more meaningful customer relationships and better customer experience, resulting in an all around higher return on investment. Undoubtedly these acquisitions will lead to an increase in Oracle's value, as could Oracle's cloud service itself.
While these acquisitions have the capability of pushing Oracle ahead of its competition, some of its competitors in the cloud-computing sector have thus far matched them step-for-step.
Salesforce.com (CRM) announced it would purchase the social marketing company Buddy Media, for $700 million. Buddy Media is a very similar company to Vitrue, and Saleforce likely made the acquisition based on acquisition moves made by Oracle last month.
Cloud computing is not the only place Oracle has been making headlines, as it has also been busy in the court system. On June 4th, opening statements were made on a litigation suit between Hewlett-Packard (HPQ) and Oracle. Hewlett-Packard is the plaintiff, and it claims Oracle violated a contract when it stopped producing new versions of its database software that could be used with Hewlett-Packard's Itanium-based servers. Hewlett-Packard is seeking up to $4 billion in damages, citing the contract assured Oracle would continue production of the compatible software. In stopping production of the software that is compatible with these Hewlett-Packard servers, this particular Hewlett-Packard product becomes obsolete.
While this litigation with Hewlett-Packard is unlikely to seriously damage Oracle, losing its court case against Google could end any chance of Oracle taking advantage of the smartphone market. In the creation of the Android Operating System, the courts ruled that Google did not violate any of Oracle's copyrights relating to the Java computer language. Oracle gained the copyrights to Java when it acquired Sun Microsystems in 2010. Now that the courts have ruled in Google's favor, Oracle misses out on being paid royalties on any Android-run products.
This outcome will hurt Oracle substantially more than the coming result of the Hewlett-Packard Case will, as Oracle has essentially lost any value that could have come with the Sun Microsystems acquisition. Larry Ellison had considered the acquisition of Java as "the single most important software asset we [Oracle] have ever acquired." Unfortunately, it appears that Oracle has missed out on its opportunity to increase profitability via Java.
Although Oracle has run into some difficulties in the court system, I do not expect a huge reaction in the stock market. The advancement Oracle has made in cloud computing, in supposedly offering the most comprehensive, advanced cloud service available, will lead to a higher valuation of the company. I expect to see a steadily increasing stock price, which makes Oracle a good company to invest in.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
