So Larry's being Larry (again). What about the stock?
It would be easy to envy the Life of Larry and to the point of losing sight of the opportunity his company offers investors. The recent fiscal Q4 earnings results were impressive in a number of ways and warrant a quick review. Though revenues were up a mere 1%, hurt primarily by the 16% drop in hardware systems sales, other areas of the company performed admirably.
License revenues, and the support services that go along with these, were up 7% and 5%, respectively. With solid GAAP operating margins of 42%, it's not surprising Oracle was able to jack up operating income to $4.6 billion, and net income followed right along with it, jumping 8% year over year.
As for the hardware side of the business, it should come as no surprise Oracle is feeling pressure as the shift to software as a service (SaaS) and cloud technologies continues. Let's face it -- for a lot of businesses it's cheaper and easier to let someone else host, maintain, and upgrade systems and software than to do it internally. And that's why cloud computing, and Oracle's decision to finally dive into it big time, is a great move for the mid- to long-term investor.
Longtime Oracle pundits will recall Ellison's allusion to the cloud several years ago as nothing more than a fad when he said that "the computer industry is the only industry that is more fashion-driven than women's fashion." But to his credit, and the benefit of existing shareholders and potential investors, the company's new Oracle Cloud and associated business lines have made it clear they've seen the light. Impressively, cloud lines of revenue are already on pace to generate nearly $1 billion in revenue annually. And with the recent unveiling of what Oracle describes as a cloud solution that offers "a broad portfolio of software as a service applications, platform as a service, and social capabilities, all on a subscription basis," Oracle took a big step in what most agree is the right direction -- an emphasis on cloud computing.
Of course, Oracle is hardly alone in embracing cloud technologies as a key revenue driver. One of the first out of the gate, and still a significant cloud competitor, is salesforce.com
As usual, what Ellison decides to do with his own money, including buying a Hawaiian island, won't affect shareholders or investors in search of growth over the coming year. And at a mere 9.5 times future earnings, Oracle offers investors some serious upside and one of the best opportunities of the technology industry bunch.
Betting on the future of the cloud and other cutting-edge technologies requires some chutzpah, no doubt. But the upside, as investors will see with Oracle, can be huge. It can be difficult to stay on top of new and improved high-tech investment options; for one of the best, check out the special free report "The Only Stock You Need to Profit From the NEW Technology Revolution."