Oracle's first quarter results are on tap Thursday and analysts are largely expecting a performance in line with expectations. Aside from the financials, Oracle's quarter will be closely watched for tips about what to expect at next week's Open World powwow.
Wall Street is looking for first quarter earnings of 37 cents a share on revenue of $7.27 billion. Gross margins are expected to be 73.38 percent.
The numbers, however, are likely to be overshadowed by product and management developments. Simply put, analysts are expecting a bevy of catalysts ahead for Oracle. Fusion applications, an emerging on-demand software strategy, hardware integration, the arrival of Mark Hurd and future acquisitions are all on the radar.
Among the key items to watch on Oracle's conference call as well as next week at Open World:
Data points indicate to an in line quarter for Oracle. Analysts have polled Oracle partners and generally found business to be solid overall. JMP Securities analyst Patrick Walravens said some regions were better than expected for Oracle, but others were light on license revenue. Retail has been strong, but telecom relatively weak. Piper Jaffray analyst Mark Murphy said:
Recent checks with 44 partners suggest Oracle will achieve its target for the software business. Specifically, partners finished 2% above plan, versus 3% above plan in the prior quarter and 2% below plan two quarters ago. Additionally, the majority of contacts (52%) experienced a better pace of business during Q1, while a minority (18%) experienced deterioration.
Comments about Fusion. At Oracle Open World, the company is widely expected to unveil Fusion apps. These long-awaited next-gen apps are supposed to be the upgrade path for acquired customers from other companies (PeopleSoft, Siebel et al). Oracle Chief Larry Ellison is likely to preview the happenings for next week. Another point worth noting: These new applications are likely to be delivered on demand too.
Will new co-president Mark Hurd speak on the conference call? Hurd, Ellison's high-profile hire, is on tap to speak at Open World next Monday, but may make a guest appearance Thursday.
Hardware traction. Last quarter, Oracle showed decent operating traction with Sun. However, the competition is picking up. Last week, IBM launched a new financing program designed to convince HP and Sun customers to trade in their gear for Big Blue boxes.
Can Oracle meet Exadata demand? Murphy said that "Exadata demand exceeds supply as current orders will probably be fulfilled around year-end." "We still expect choppy hardware results but a very favorable bias to margins," he added.
What's next? Jefferies analyst Ross MacMillan said that once the Sun acquisition is fully integrated Oracle is likely to go shopping again. There are already rumors that Oracle may be eyeing some sort of services play. Genpact as well as Cognizant are names running through the acquisition rumor mill.
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