When I bought shares of Oracle
What I didn't know is just how much the database king needs PeopleSoft.
In reporting first-quarter fiscal 2005 earnings yesterday, Oracle said new applications sales were down to $69 million from $107 million during the same period a year ago. Executives explained the shortfall by saying a number of deals expected to close would now be completed in the second quarter.
But that poor showing couldn't put a damper on an otherwise strong performance. Revenue rose 7% from last year to $2.22 billion, and net income climbed 16% to $509 million. Structural free cash flow once again was higher than net income, rising 24% to $528 million.
The good news for Oracle is that the results make the most compelling argument yet for an "OracleSoft" combination. PeopleSoft has seen its net income deteriorate in recent quarters, and Oracle's applications business clearly needs the boost.
Moreover, with cash flows growing as they are, Oracle can easily afford the $7.7 billion price tag it's proposing for PeopleSoft. Yet even with a decisive court victory over the Justice Department, Oracle still has several hurdles to clear before it can close a deal for PeopleSoft, including possible opposition from the European Commission, as well as two civil trials.
The wrangling is worth it, however. All indications are that Oracle would do better as OracleSoft. And that's saying something, for like Motley Fool Stock Advisor pick Dell
No wonder Oracle shares are up nearly 7% today. For a tech market in which earnings disappointments from heavies such as Intel
For more Fool coverage of Oracle:
- OracleSoft may be closer than we think, at least if Larry has his way.
- A Foolish duel over Oracle's prospects remains tight; are you bullish or bearish on the database king?
- Last quarter was equally strong for Oracle. Can the good times continue?
- Has Larry Ellison Gone Crazy?
- The Case for OracleSoft
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