Oracle no longer just about database
Oracle (ORCL): As previously noted, we remain bullish on Oracle. In our view, Larry Ellison is determined to make Oracle the largest Software Company through acquisition. While we can no longer keep up with the number of acquisitions Oracle has made in the last 5 years, one thing is certain; the company is once again interesting from investment perspective.
As long as Ellison is running Oracle, this buying spree will continue. Trading at approximately $18 per share, we still believed Oracle is a value. Last quarter’s profit of 35% compared to prior year is quite impressive (Forbes, 2007). This is evident the acquisition strategy is starting to pay dividend. For a company this large to grow at 35% is indeed impressive (albeit it was through acquisition).
Another important consideration about Oracle is the company is no longer just a database company. While Oracle is mainly known for their database, this company has been diversifying its products in the last 5 years. In our opinion, diversification is great as the company is not dependent on a single product. From that vantage point, it is relatively safe investment.
Enterprise is really where the money is for Software Companies. As the largest Enterprise software company, ORCL should continue to do well. Given the economy appears to be doing quite well, we believed ORCL should be able to easily meet Wall St. expectation as Enterprise should continue to invest in technology. However, simply meeting expectation won't move this stock; we actually believed ORCL will continue to surprise Wall St. in 2007. Therefore, our end of year price target for ORCL is $25 per share.
