Finally, the Sun Shines on Oracle

Speculators can rest a little easier today. Oracle (Nasdaq: ORCL  ) isn't suffering a lethal case of acquisition indigestion. Sun Microsystems is profitable once more.

And that's good news for Oracle, which earned $0.60 per share after excluding special items in its fiscal fourth quarter. Analysts were expecting $0.54, according to Thomson Reuters data quoted in media reports. Revenue improved 39% including Sun's contributions; looking only at Oracle's legacy software revenue, growth was 13%. 

"This quarter, we saw sales growth for Sun hardware products. In addition, our estimate for the Sun business contribution income comes in at over $400 million for our first full quarter after the merger," said company co-president Safra Catz in a conference call with analysts yesterday.

Earlier reports suggested Sun was acting as dead weight in Oracle's portfolio of acquired properties. The company still plans to substantially reduce its Sun workforce in Europe and Asia.

Overseas layoffs should help Oracle squeeze $1.5 billion worth of operating income out of Sun next fiscal year, a well-documented goal for the company. But getting there will require more than cost cuts. The database king is going to have to get very good at winning against IBM (NYSE: IBM  ) and Hewlett-Packard (NYSE: HPQ  ) for big-ticket hardware deals, even as it competes against SAP (NYSE: SAP  ) and salesforce.com (NYSE: CRM  ) for new software installations. So far, Oracle appears to be doing well.

Yet I'd like to see more evidence of gains before buying shares again. On the other hand, I see no reason to sell the substantial stake we already own in our family portfolio.

Now it's your turn to weigh in. Would you buy shares of Oracle at present levels? Let us know by logging into Motley Fool CAPS and rating the stock. You can also leave a comment here to explain your thesis.

salesforce.com is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of IBM and Oracle at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool owns shares of Oracle and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy still hasn't traded in its black and white TV.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1218746, ~/Articles/ArticleHandler.aspx, 8/30/2014 10:17:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement