Will Oracle Finally Break Out Of Its Range

Shares of Oracle (ORCL) have been range-bound for some time. Berhaps it was based on concerns that the company could not digest all the software firms it had bought. Perhaps results were too lackluster.

But, now the company has announced that Oracle's revenue for the quarter ending May 31, will be up 25% from last year to $4.85 billion. Oracle's EPS in the quarter a year ago was $.20. This year it was $.24 for the quarter and $.29 if one-time costs are taken out.

A few of the recent quarters have been choppy. The February 28. 2006 quarter was down from the immediately previous quarter, and opearting income also dropped a few percentage points to $1.051 billion. The August 31, 2005 quarter was an even bigger red flag. Revenue fell from $3.878 billion in the May 31, 2005 quarter to $2.768 in the August period. Operating income fell from $1.047 billion to $712 million.

As recently as April, Forbes reported that Morgan Stanley was a bit down on Oracle: "Longer term, a recent Morgan Stanley survey of Oracle applications customers does not bode well for Oracle’s organic revenue growth outlook. Nearly 80% expect flat spending on Oracle’s e-business suite, while 71% see flat database spending."

But, it would appear that the numbers have proved the company's strategy is a good one.

Oracle's stock has been stuck between just below $12 and $15 since late 2004.

Now, it looks like it might break out.

Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com He does not own securities in the companies he writes about.