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Contributors: Douglas McIntyre Jon C. Ogg

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Friday, July 21, 2006

Anyone Notice Multi-Year Highs in Oracle?

Stock Tickers: ORCL, IBM, INFY, SAP, BOBJ, CRM

Oracle (ORCL) has just reached a NEW 52-WEEK HIGH going over the $15.20 mark today, if you can believe it. It has backed off a bit since the brief high. Our crystal ball is still in for repairs at the shop, so we cannot say if it will continue to rise or not. But for now, it is acting well even if it didn't march on.

They issued strong guidance last month and hit the right cylinders with the formal earnings report in June. We know we have seen issues in the software world and in the global IT-spending arena. But for now, the street is giving the company the benefit of the doubt and analysts aren't taking down any numbers. Companies like IBM (IBM) and Infosys (INFY) have managed to dodge the bullet, but competitor SAP (SAP) fell on the knife dropping about 7% last week on its shoddy numbers. Business Objects (BOBJ) fell over 20% after they came clean about the earnings and revenues.

It looks like the killing off of PeopleSoft and JDEdwards has worked well for Oracle, despite all of the criticism it endured for it. Shareholders are finally being rewarded/ After looking at the chart it shows that is isn't just a 52-week high, but it is a high since early 2002.

What does all of this mean to the "Poor Man's Oracle" via Salesforce.com (CRM)? The company just had its annual shareholder meeting earlier this month and it is set to report earnings in mid-August. Most of the recent analyst calls in Oracle are positive, although the calls on Salesforce.com are mixed. Cramer's most recent call on CRM was negative earlier this month. CRM is down down almost 3% today, and the $22.03 level is very much at the lower-end of the 52-week trading band ($18.63 to $42.99) and it STILL has a 100 trailing p?E. The street has consensus EPS at $0.20 for Fiscal January 2007 and EPS of $0.41 for Fiscal January 2008 (a 50+ forward P/E for 18 months out).

Oracle has a market cap of $80.9 Billion, with a trailing P/E of 23.75. Oracle has almost $8 billion in cash and over $3 billion in receivables, and has billions in goodwill and intangibles. It has over $7 billion in long-term debt and longer-term obligations, but its balance sheet is not in any red line areas and it adds cash every month.

Jon C. Ogg
July 21, 2006
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