Breakfast News: National Semiconductor Back in the Black


Wednesday, September 15, 1999

"There are only two emotions in Wall Street -- fear and greed."
-- William M. LeFevre Jr.

Oracle Rolls, Wall Street Waffles

By Richard McCaffery (TMF Gibson)

Database software maker Oracle (Nasdaq: ORCL) reported last night that net income for its fiscal first quarter grew 21% to $237 million, or $0.16 per share, compared to net income of $195 million and earnings of $0.13 a year ago. The Redwood Shores, California company's performance matched the Zacks mean estimate, but analysts had hoped for earnings closer to $0.20 per share, which explains why the stock fell in overnight trading.

While the drop in share price may reflect what some analysts think, it doesn't reflect the company's fundamentals. The world's second-largest software company grew its operating margins to 17.4%, up from 15.9% a year ago. It has $2.7 billion in cash, slashed receivables 3.2%, shaved a bit off its long-term debt, and announced a plan to save $1 billion annually by using its own applications to improve efficiency.

No question Oracle's quarter was less impressive than the first quarter last year, when the company grew net income 30% and increased its massive database sales 25%, compared to 8% for the most recent period. And probably Oracle Chairman and Chief Executive Larry Ellison should learn to say less about most things, especially the company's upcoming quarterly performance.

Yet the company that loves to hate Microsoft (Nasdaq: MSFT) has done a much better job articulating its strategy in the last few quarters, most notably in the area of e-commerce, where its database products, applications, and services are well positioned to power the big push online.

Fools should leave yapping about whisper numbers to the Wise.

News to Go

As expected, communications and electronics firm Motorola (NYSE: MOT) announced plans to buy cable set-top box maker General Instruments (NYSE: GIC) in a stock deal worth $11 billion. The merger gives Motorola access to much-needed broadband technology, and gives General Instruments access to Motorola's deep pockets and market flash.

Food producers H.J. Heinz (NYSE: HNZ) and Bestfoods (NYSE: BFO) are considering a merger that would create the second-largest food company in the U.S., The Wall Street Journal reported.

Telecommunications giant AT&T (NYSE: T) plans to freeze hiring and cut jobs as part of a move to shave $2 billion in costs by 2001, Bloomberg reported.

Disk drive manufacturer Seagate (NYSE: SEG) will take a $200 million charge against earnings in the upcoming quarter as it moves to cut 10% of its workforce -- about 8,000 jobs -- over the next nine months.

Bank holding companies Dime Bancorp (NYSE: DME) and Hudson United (NYSE: HU) agreed this morning to a $3.6 billion merger that will create the largest independent regional bank in the Mid Atlantic.

More Foolishness

Check out Warren Gump's take on Best Buy's stellar quarter in yesterday's Fool on the Hill... Rick Aristotle Munarriz takes a walk with Pier One... Selena Maranjian contributes our latest entry to the Fool's Hall of Fame... David Gardner adds his two cents on the benefits of ownership.

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