Business software maven Oracle (NASDAQ:ORCL) is set to report third-quarter 2007 earnings on Tuesday night. Let's see what the prophets say about the company today.

What analysts say:

  • Buy, sell, or waffle? Of the whopping 39 analyst firms following Oracle, 22 of them are saying "buy," 4 are chanting "sell," and the other 13 are silently holding still. In Motley Fool CAPS, about 925 players join the chorus, proclaiming the stock's three-star status.
  • Revenues. The average analyst expects sales of $4.33 billion, up 22.6% from last year's $3.53 billion.
  • Earnings. $0.23 per share would satisfy the Wall Street consensus, up from $0.19 a year ago.

What management says:
The last few earnings reports have included some variation of "we're taking market share from our competitors in every market," and the latest one was no exception. "Our applications acquisition strategy has strengthened our competitiveness in several industries, including retail, banking, telecommunications, and utilities," said CEO Larry Ellison, after intoning the usual litany of fallen foes. It's actually a refreshing audacity in this age of political correctness.

What management does:
Among all the major margins, the only real fluctuation happens in the free cash flow ratio. The net income line is so much closer to flatlining that it makes me wonder whether Oracle likes to manage its earnings with a heavy hand. It's much harder to pull that sort of stunt in naked cash flows.

However, there's no question about the strength of this revenue growth trend. And with solid cost controls in place, that growth is amplified on the net income line.

Margin

8/2005

11/2005

2/2006

5/2006

8/2006

11/2006

Gross

77.3%

76.9%

77.3%

77.6%

77.1%

76.7%

Operating

36.0%

34.1%

35.2%

34.8%

34.7%

34.5%

Net

23.4%

22.3%

23.1%

23.5%

23.2%

23.0%

FCF/Revenue

27.4%

25.8%

27.3%

29.9%

29.4%

27.3%


Y-O-Y Growth

8/2005

11/2005

2/2006

5/2006

8/2006

11/2006

Revenue

19.9%

22.1%

21.9%

21.9%

23.1%

24.7%

Earnings

5.3%

(2.4%)

8.7%

17.2%

22.0%

28.6%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Yes, it's mostly acquired growth, but that's what a tech company is supposed do with its spare cash. Do you hear me, Google (NASDAQ:GOOG)? Apple (NASDAQ:AAPL)? You can sit, Microsoft (NASDAQ:MSFT). You've been following that advice for decades. As for Oracle, the company recently agreed to buy another piece of the business management puzzle, employee performance evaluator Hyperion, for $3.3 billion.

It's an ongoing arms race with business intelligence specialists like German giant SAP AG (NYSE:SAP) and BEA Systems (NASDAQ:BEAS), as well as with all-around software sluggers like the aforementioned Redmond rival and good old IBM (NYSE:IBM). Ellison seems bent on ruling the enterprise software world from the top layers of management software, down through the bread-and-butter database market, and right down to the bare-metal operating system.

Microsoft is a Motley Fool Inside Value selection. What sets this company apart from respectable rivals like IBM and Oracle, which don't have any Foolish newsletters to their names? Find out with a free 30-day service trial.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is always animated and audacious.