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.