Oracle Corporation Earnings: What to Expect Tuesday

Oracle (ORCL 0.22%) will release its quarterly report on Tuesday, and investors have high hopes that the tech giant will be able to produce solid revenue and earnings growth. Even though tech peers IBM (IBM 1.05%) and Cisco Systems (CSCO 0.06%) have struggled through a tough industry environment and have seen their sales actually decline recently, Oracle has done a good job of emphasizing its cloud-computing expertise and focusing on the most lucrative areas of the technology sector.

Many rank-and-file investors don't know Oracle nearly as well as they know more consumer-facing technology companies, because most of Oracle's business is aimed at enterprise customers. Yet with its pioneering role in building the software-as-a-service business model, Oracle got a head-start on a trend that IBM, Cisco, and many of their competitors are only now starting to move forward on. Yet with smaller companies biting at its heels, can Oracle hang onto its first-mover status and keep its leadership role in the industry? Let's take an early look at what's been happening with Oracle over the past quarter and what we're likely to see in its report.

Oracle CEO Larry Ellison. Image Source: Oracle PR, Flickr.

Stats on Oracle

Source: Yahoo! Finance.

Can Oracle earnings keep rising?
In recent months, analysts have been slightly more favorable in their views on Oracle earnings, boosting their full-year projections for both fiscal 2014 and 2015 by $0.02 per share. The stock has performed well, climbing 10% since early December.

Oracle's strong November-quarter results helped set the stage for the stock's strong returns over the past several months. Adjusted earnings rose 7% on a 2% gain in revenue, with Oracle seeing the same pressure on hardware sales that IBM and Cisco have experienced. Still, a combination of solid performance in selling support contracts for hardware as well as a 6% jump in software license renewals produced overall growth, and Oracle said that it expects hardware to perform better in the February quarter because of new big-data-related devices and storage.

Yet Oracle has had its share of trouble in certain areas. Ever since its acquisition of Sun Microsystems, Oracle has tried to compete in the cutthroat server industry, where IBM, Cisco, Hewlett-Packard (HPQ 1.55%), and many others have tried to find success. Oracle's server revenue has fallen for years, and although the Sun acquisition was also valuable in getting access to Sun's client list and software platforms, some fear that even a jump in data-analytic demand won't be enough to boost server revenue in the long run. Similar challenges exist in other areas that Oracle has focused on, including cloud services and data-analytics software.

In order to try to bolster its competitive edge, Oracle has bought several companies in the digital marketing space lately. Last month, Oracle bought BlueKai, following up on similar purchases last year of email-marketing company Responsys and market-solutions specialist Eloqua. With the acquisitions, Oracle hopes to help its clients communicate better both with other businesses and with consumers, making it easier to coordinate marketing efforts and use the diverse set of resources that businesses can use now to maximize their appeal to potential customers.

In the Oracle earnings report, be sure to look at the breakout across Oracle's different segments to see where most of the company's growth comes from. Even if top- and bottom-line numbers look attractive on the whole, Oracle will still need to work hard to keep growing and make the most of its edges against HP, Cisco, IBM, and other tech stalwarts.

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