Can Or­a­cle earn­ings re­ally keep the Tech rally go­ing?

Financial Mirror (Cyprus) - - FRONT PAGE -

Or­a­cle Cor­po­ra­tion (NYSE: ORCL) is set to re­port its sec­ond quar­ter earn­ings after the mar­ket closes on Wed­nes­day. Thom­son Reuters has con­sen­sus es­ti­mates of $0.68 in earn­ings per share and $9.52 bln in rev­enue. The sec­ond quar­ter from the pre­vi­ous year had $0.69 in earn­ings per share and $9.28 bln in rev­enue.

Dur­ing the cur­rent quar­ter Or­a­cle made a huge change when the company an­nounced that CEO Larry El­li­son had been named the company’s ex­ec­u­tive chair­man and chief tech­ni­cal of­fi­cer, and Safra Catz and Mark Hurd have both been pro­moted to CEO. All man­u­fac­tur­ing, fi­nance and le­gal func­tions will con­tinue to re­port to Or­a­cle CEO Catz. All sales, ser­vice and ver­ti­cal in­dus­try global business units will con­tinue to re­port to Or­a­cle CEO Hurd. All soft­ware and hard­ware en­gi­neer­ing func­tions will con­tinue to re­port to Or­a­cle Chair­man and CTO El­li­son.

El­li­son has been a mem­ber of Or­a­cle’s board since 1977. He owns 25% of the company’s shares. While he may not own 51% of the company, con­trol of a quar­ter of Or­a­cle’s shares qual­i­fies as a level of lever­age that is beyond any rea­son­able chal­lenge.

In the press re­lease about the changes, El­li­son said: “Safra and Mark will now re­port to the Or­a­cle Board rather than to me. All the other re­port­ing re­la­tion­ships will re­main un­changed. The three of us have been work­ing well to­gether for the last sev­eral years, and we plan to con­tinue work­ing to­gether for the fore­see­able fu­ture. Keep­ing this man­age­ment team in place has al­ways been a top pri­or­ity of mine.”

A few key an­a­lyst firms weighed Or­a­cle’s po­si­tion re­cently.

Mor­gan Stan­ley raised shares of Or­a­cle to an Over­weight rat­ing from Equal Weight and moved its price tar­get up to $50 from $45, on De­ce­me­ber 15. Piper Jaf­fray ini­ti­ated cov­er­age with a Neu­tral rat­ing and a price tar­get of $44 on De­cem­ber 12, while JP Mor­gan ini­ti­ated cov­er­age with an Un­der­weight rat­ing and a price tar­get of $38 on De­cem­ber 2.

Shares of Or­a­cle were up over 3% at $41.35 in the sec­ond half of Mon­day’s trad­ing. The stock has a con­sen­sus an­a­lyst price tar­get of $43.53 and a 52-week trad­ing range of $33.35 to $43.19.

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