Seeking Alpha

Oracle near $40 as investors fret over growth; acquisition announced

  • The license growth worries that plagued Oracle (ORCL -5.7%) much of last year are back with a vengeance following yesterday's FQ4 miss, in spite of the in-line guidance that followed it.
  • Citi has cut shares to Neutral, arguing SaaS (cloud app) strength isn't reflected in earnings. Before the downgrade, the firm noted estimated total license revenue of $4.09B missed its $4.3B estimate.
  • But Oracle also has its defenders. BMO (Outperform) asserts Oracle's cloud transition efforts are still going well, and that "new product releases across the board should be a tailwind to growth."
  • The firm attributes the FQ4 miss to an apparent "thousand cuts" that include deal slippage, Asia-Pac weakness (an ongoing issue), a shift from up-front license payments to cloud subscriptions, and potential order delays ahead of Oracle's 12c database launch (previous).
  • Separately, Oracle has announced it's buying LiveLOOK, a developer of co-browsing/screen sharing tech for Web customer support apps. Terms are undisclosed.
  • Oracle, which bought cloud customer support firm RightNow in 2011, plans to integrate LiveLOOK's offerings with its Service Cloud platform. Rival LivePerson (LPSN -0.9%) recently announced a deal to buy co-browsing tech developer Synchronite.
  • Prior coverage. CC transcript.

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Comments (2)
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    the theatrics around this company are a sight to behold. if ever there was a time for some QT its in the Oracle. Pricing in the cloud computer space has utterly collapsed. Remote hosting is what is going to solve the problems of speed and security on the web...but in my view Oracle needs to come out with an actual device and start truly deploying their formfactor...which is unique from Apple and Microsoft. They really need to start putting some "fun" into their business.

     

    I read the conference call and it was all very "inside ball." kind of depressing. the numbers were incredible of course.
    20 Jun 2014, 12:01 PM Reply Like
  • jstratt
    , contributor
    Comments (2730) | Send Message
     
    ORCL is a good company with a good future. That said it was priced for a higher level of growth.

     

    I do think it was undervalued a year ago at 41% below yesterdays close. Back then the cloud risk was higher. I am still trying to assess what I feel the fair value is for ORCL after reviewing the call.
    20 Jun 2014, 12:57 PM Reply Like
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