Could anyone doubt that Larry Ellison is the Muhammad Ali of software? Writing on Oracle (ORCL)'s triumphant fourth-quarter earnings call to analysts, SmartMoney.com's Cintra Scott called Ellison a "big-talker" and described how Ellison "insult[ed] the competition."
The Associated Press' Michael Liedtke cast Oracle as equally, uh, self-confident, dubbing the firm, "the self-proclaimed king of the Internet business software." In a further rumble-in-the-jungle scenario, Liedtke noted rival firm SAP's displeasure, with its execs promising to "reassert its position" and predicting that "Oracle would get its comeuppance in the upcoming year." Perhaps we'll hear more trash-talking in future earnings calls.
Oracle did have a thing or two to crow about; its fourth quarter earnings beat analysts' expectations by six cents a share. Excluding a one-time investment gain from the sale of part of its Japanese unit, Oracle earned $926 million, or 31 cents per share, which was a 76 percent increase from the previous year's fourth quarter.
Reporters ran varying adjectives used by Ellison and CFO Geoff Henley to describe Oracle's pipeline: it was simultaneously "awesome," "breathtaking," "spectacular" and "stunning." (It's a sad day when words used to describe the Grand Canyon are the same words used to describe a sales pipeline.)
Impressive though its figures were, Oracle's report was far from a knockout, and its stock actually dropped Wednesday, the day after the numbers were announced. Most attributed the fall to investor concerns over slower than expected growth in its flagship database unit, which grew by only 12 percent compared to an expected 20 percent.
Both Cintra Scott and Fool.com's Richard McCaffery included explanations of Oracle's new sales policy, which management claimed affected sales reporting for the quarter. Sales people kept their territory from one year to the next, and there were no "crazy discounts" given year-end to meet quotas. McCaffery also noted that Oracle is shifting its customer base to include more small- and medium-sized customers, which should result in a smoother earnings stream.
NYTimes.com/TheStreet.com (TSCM) staff reporter Jennifer Barrett quoted J.P. Morgan analyst William Epifanio: "Here we have a stock that's trading at 126 times current year earnings Š When you're trading at the multiples Oracle is at right now, you have to continuously deliver terrific results at all levels." Barrett notes that Epifanio nonetheless rates Oracle a buy and makes it his top sector pick for the year.
The New York Times' Lawrence M. Fisher quoted Banc of America Securities' Robert Austrian, who said: "They had one chink in their armor ... but that's balanced by the five gold stars they get in other areas."
SmartMoney.com's Scott chose to highlight a more negative view from Merrill (MER) Lynch's Chris Shilakes, who downgraded the stock from buy to accumulate. According to Shilakes' model, the stock that grew 600 percent last year has room to grow 11 percent in the coming year. Sting like a bee, indeed. -Lark Park
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