If there is one high tech company that has aggressively pursued the advancement of technology in its field, that would be Oracle (ORCL). Here is a company with a good vision that is reinventing itself through acquisition of smaller innovative cutting edge businesses.
Innovation through Acquisition
Oracle has been very aggressive in 2012, preparing for its future through acquisitions. All in all it has made eight this year with its latest being a company called Xsigo which is a cloud greasing company. This company works within the cloud, virtualizing all key networking components like switches and routers so that they operate at maximum efficiency. It allows larger companies like eBay (EBAY) and Verizon (VZ) to connect any server to any network and storage. Xsigo complements Oracle's software, server, storage, and network product portfolio helping it remain relevant as data handling continues to change and big companies like Oracle look to keep up. It can either spend money on continued (R&D) or buy smaller promising companies
Why buy? Technology supplying companies need to keep up with ever changing technology or perish. The markets won't wait and there is no better way to stay on top than to balance out buying smaller companies with newer technology and maintain a positive outlook on their bottom lines. If a technology supplier, for example Oracle, fails to have a host of ideas suited for different scenarios, it may very well bite the dust.
Oracle's latest deal heightens the endless debate, rallied by shareholders, who argue that the company is more concerned about its interests than it is about shareholders.
Oracle Acquires Skire
In utility operations (as an example) workers must be able to communicate together. This includes: management, customer service reps, dispatchers and technicians to name a few. They must be able to communicate and access pertinent information for customers when needed in order to keep them satisfied. This "system" of Oracle's is an integrated, end-to-end solution that guarantees service availability and automates field operations via state-of-the-market dispatch, scheduling and routing. Mobile Workforce Management optimizes the service chain, improves workforce productivity, and reduces operating expenses while eliminating missed appointments, service backlogs and overtime costs.
To enhance this operation as well as encompass more systems management solutions, it bought all of the assets of Skire, a leading provider of capital program management and facilities management applications available on the cloud and on-premise. Its software provides all encompassing managing and governing tools across all project phases from planning and building to operations, enabling companies to effectively manage their capital and construction programs. The combination of Oracle's and Skire's solutions is expected to help organizations manage their projects and facilities with more predictability and financial control, improving profitability and operational efficiency.
Cloud's Social Media Platform
Oracle has a cloud based platform it calls Oracle Public Cloud. The company's aggressive move to formulate a world wide server using the cloud has been quite an undertaking. To host their programs on remote servers, bringing down costs and offering easier use on mobile devices that have grown more popular with employees. As is its plan, Oracle has purchased a number of companies to offer software based services in this industry.
- It is purchasing a San Francisco-based social-media software company Involver aimed at enhancing the social media side of working within the cloud. Its cloud-based enterprise software and platform helps companies develop and push customized social-media and Internet marketing campaigns, while Collective Intellect helps businesses monitor and respond to consumer conversations on social-media sites.
- Its acquisition of Atlanta-based Vitrue is a one-stop service for all social media accounts and management, allowing marketing departments to access and update accounts for Facebook, Twitter, Google (GOOG)+, YouTube and other social networks.
Involver and Oracle together will create the world's most advanced cloud-based social platform that integrates marketing, sales and service touch points all together.
Analysts
RBC Capital Markets upgraded Oracle Corp to "outperform" from "sector-perform." They see the hardware industry providing growth opportunities as the smaller engineered systems business increases rapidly. The engineered systems business line remains a high priority for the company as it envisions integrated products driving its hardware business which has struggled. Oracle's engineered systems business is comprised of pre-engineered and pre-assembled hardware and software bundles which the company. As engineered systems become a more meaningful percentage of the hardware mix it should begin to drive both growth and profits for this ailing segment. It is now operating at a rate of over $1 billion yearly and an 'integrated solutions system" is the center of the company's future plans.
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The Options Play
I like the chances of the stock rising to $36. Presently it looks like an ascending triangular pattern could break out at anytime, currently trading around $30, let's look at a Bull Call Spread.
- Buy a December 2012 call with a strike of '31' (priced at $1.86)
- Sell a December 2012 call with a strike of '32' (priced at $1.37)
- Net Debit to Start: $0.49
- Maximum Profit: $0.52
- Maximum Risk: net debit
- Maximum Length of Play: 5 months
Reasoning behind the Play
- Oracle's chart looks like it is ready to take the next step into bullish territory.
- With hardware pricing up, revenue should look better.
- Solid cloud-based service will rival anyone in the world.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
