Shares of Oracle
I'll get to why in a minute. First, let's talk numbers. Earnings, at $0.30 per share on a non-GAAP basis, were roughly in line with what analysts expected. Oracle's $5.1 billion in revenue wasn't; Wall Street had projected $5.2 billion in sales for the database king.
Cue grumpy investors. ("Release the hounds! Where are my flood boots! Find my super-secret stash of emergency Twinkies!")
To be fair, there is a legitimate cause for concern here. New license revenue declined 17% year over year. Mix in increasing competition from SAP
And yet, even with all that, Oracle produced more than $3.6 billion in free cash flow during the quarter, and $8.5 billion over the trailing 12 months. Oracle trades for just under 13 times FCF, below its recent cash flow growth rates. (Its trailing cash flow has grown 14% over the past year, for reference.)
I'll grant that Oracle doesn't offer much of a discount at these levels, but does it really need to? Buying Oracle invests you in one of tech's most durable businesses, led by an experienced management team that's buying a key catalyst -- Sun's hardware and software business -- at a fair price.
Oracle may not be cheap, but, to me, it's still as good a long-term value as you'll find in the tech sector. I've bet real money on it. Think I'm crazy? Tell me, using the comments section below.
Get your clicks with related Foolishness:
Fool contributor Tim Beyers owned shares of IBM and Oracle at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy thinks it's time for the perma-bears to hibernate.