OK, here's our dinner. So where's the movie? Oracle
All kidding aside, the mercurial Mr. Ellison offered up a bit of insight on Oracle's customer situation, with a dash of his trademark bravado. The retail application business was singled out as an explosive growth opportunity that "should move the needle" on the bottom line by next quarter. Ellison noted that "eight out of 10 of the largest retailers in North America now use Oracle retail applications, where only one uses SAP
Ah, yes, he got in a couple of digs at SAP -- it just wouldn't be cricket otherwise. For the record, the top-10 retailer using SAP software is Home Depot
Wal-Mart is the next customer coming into the Oracle fold, in a "very, very large deal" that didn't quite happen in the just-completed quarter. Oracle Co-President Charles Phillips added detail on a handful of middleware deals, which is closer to Oracle's comfort zone. Hewlett-Packard
That's a lot of tough, competitive language. And Ellison wasn't done yet: "You may have noticed that IBM and Yahoo!
Yowza. But even with all of those little nags at the competition, this conference call was a far cry from the fire and brimstone Ellison usually musters. And CFO Safra Katz said that application revenues, for all the talk about big deals, grew only 1% over last year if you back out contributions from new acquisitions. The market seemed to sense weakness in this performance, dropping Oracle's share price by 4.5% in one day.
There is little doubt that Oracle will continue to grow for the foreseeable future. The real question is, how quickly? Internal goals are set for 20% annual EPS growth for another two and a half years, which makes the current trailing P/E of 25.7 look about right. But growing by acquisitions alone is an expensive plan, and Ellison and his gang need to come up with some organic growth outside of the mainstay database business. IBM, for one, looks cheaper in many ways, even though its stock price is nibbling at 52-week highs, whereas Oracle's isn't.
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