Image via CrunchBase
It amazes me how some self-proclaimed Wall Street experts continue to be so wrong for so long. These geniuses will casually toss enormous price targets at anything with close ties to “big data” and “cloud computing” – except, they have no idea what these terms really mean.
Oracle serves as the perfect example. Although the company continues to put together one solid quarter after the other, for many analysts it’s not enough. Oracle has to “blow the doors off” just to enter the discussion. Instead, the market has turned its attention to the “new flavors of the month” – names that include Salesforce.com, SAP and EMC.
Oracle has always taken this disrespect in stride. However, all of this may soon change. As evident by the company’s second quarter fiscal 2013 earnings results on Tuesday, it seems that the database giant has every intention of putting its rivals out of business. But did it do enough to get Wall Street's attention?
For the period ending November 30th, Oracle reported net income of $2.6 billion, or 53 cents per share – representing an 18% increase year-over-year. The company said excluding charges related to acquisitions and other costs, earnings would have arrived at 64 cents per share – enough to beat analysts’ estimates of 61 cents per share.
The company reported a 3% increase in revenue reaching $9.1 billion – exceeding Street estimates by $900 million. Software licenses and subscriptions business performed exceptionally well – soaring 17% year-over-year. This was good enough to exceed management’s most bullish projections three months ago.
This is certainly an encouraging sign for investors since roughly a quarter of Oracle's revenue comes from a stream of new licenses and subscriptions. It’s even more impressive from this standpoint: as Oracle issues new software upgrades, the company will be able to generate additional revenue from license and subscription renewals. In other words, Oracle will be able to rely on recurring revenue that comes at lower costs to the company.
In terms of guidance for the February quarter, Oracle projects adjusted earnings to arrive in the range of 64 cents to 68 cents per share. The company also expects revenue to come in between $9.1 to $9.5 billion, which would be good enough for a year-over-year increase of 1 to 5%. Not entirely breathtaking growth numbers, but on the other hand it speaks of consistency.
What’s more, the Street continues to take for granted Oracle's strong cash position, deep market penetration and innovative strategies. As it stands, there is no other name that ties in all of the cloud benefits and data analytics together as Oracle. At $32 per share, the stock still presents excellent value as it has a chance to reach $40 during the course of the next 6 – 12 months.
