Oracle Fulfills Its Annual Prophecy: Fool by Numbers

• Email
• Share
• Print

On June 26, software giant Oracle (Nasdaq: ORCL) released full-year 2007 earnings for the period ended May 31.

• Stable margins and a modest stock buyback program helped Oracle preserve the revenue gains all through the income statement.
• The company's penchant for growth by acquisition has reduced the cash balance and increased the debt load a bit. But the combined $1.1 billion hit doesn't hurt that much, considering that Oracle spent $5 billion on the year's mergers and acquisitions. Most of the funding came from the massive free cash flow.
• Management aims for 20% growth in earnings per share every year, and easily met and beat that target in 2007.
• Oracle has a Motley Fool CAPS rating of three stars (out of a potential five), while competitors Microsoft (Nasdaq: MSFT) and IBM (NYSE: IBM) carry two- and three-star ratings, respectively.

(Figures in millions, except per-share data)

Income Statement Highlights

	FY 2007	FY 2006	Change
Sales	$17,996	$14,380	25.1%
Net Profit	$4,274	$3,381	26.4%
EPS	$0.81	$0.64	26.6%
Diluted Shares	5,269	5,287	(0.3%)

Get back to basics with the income statement.

Margin Checkup

	FY 2007	FY 2006	Change*
Gross Margin	76.7%	77.5%	(0.8)
Operating Margin	33.2%	32.9%	0.3
Net Margin	23.8%	23.5%	0.2

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	FY 2007	FY 2006	Change
Cash + ST Invest.	$7,020	$7,605	(7.7%)
Accounts Rec.	$4,074	$3,022	34.8%

Liabilities	FY 2007	FY 2006	Change
Accounts Payable	$315	$268	17.5%
Long-Term Debt	$6,235	$5,735	8.7%

The balance sheet reflects the company's health.

Cash Flow Highlights

	FY 2007	FY 2006	Change
Cash From Ops.	$5,520	$4,541	21.6%
Capital Expenditures	$319	$236	35.2%
Free Cash Flow	$5,201	$4,305	20.8%
Owner Earnings	$5,241	$4,173	25.6%

Free cash flow is a Fool's best friend.

Related Foolishness:

• Oracle Sues SAP, Overstates Business Progress
• Turning $1000 Into $277 Trillion
• Foolish Forecast: Oracle Musings

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund had no position in any company mentioned. Microsoft is a Motley Fool Inside Value recommendation. Fool rules are here.