With around $800 million in cash, it has plenty of time to push its operations into the black. However, losing $1.50 a share, as it did in fiscal 2013, isn’t a trend that can last for very long. With the shares up around 30% since their initial public offering, only aggressive investors and those expecting an acquisition should step in here. On a positive note, it only lost $0.20 a share in the recently ended quarter.
Don’t Count Ellison Out
Workday Inc (NYSE:WDAY) and salesforce.com, inc. (NYSE:CRM) are two of the bigger competitors to Oracle, but they are both tiny in comparison. While that means they offer investors vast growth potential in the near term, it doesn’t mean that Oracle is going out of business any time soon. While aggressive investors might find the pair appealing, more conservative investors should probably stick the struggling giant.
For example, although Salesforce and Oracle compete with each other, they have also agreed to partner up with a nine-year agreement. Oracle will basically be providing the back end to Salesforce’s front end. The deal allows Oracle to benefit from an upstart competitor’s growth instead of just losing out on direct sales. Salesforce, meanwhile, gets to spend more time creating services and selling them, which is where it excels.
Oracle recently inked a deal with Microsoft, too. This deal should allow customers to keep using Oracle software even if they decide to shift to Microsoft’s cloud services. By making its enemies its friends, Oracle is seemingly admitting it can’t do everything. However, it is also setting itself up to be a part of the solution no matter who gets the cloud sale. That’s a smart move.
A Good Price
Although Oracle Corporation (NASDAQ:ORCL) hasn’t been performing up to expectations of late, its top and bottom lines have been growing solidly for a decade, including right through the deep 2007 to 2009 recession. Moreover, it initiated a dividend a few years ago and just announced plans to double the payment.
With a Price/Earnings (P/E) multiple of around 14, the company is trading cheaply compared to its history and the money-losing cloud stocks. And Oracle is already pushing into the cloud via acquisition and partnerships like the one with Salesforce. And it has about $15 billion more cash than it has debt to keep funding its efforts. That could make now a good time to pick up this giant as it slowly turns the ship in a new direction.
The article The Other Big Technology Shift originally appeared on Fool.com and is written by Reuben Brewer.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Salesforce.com. The Motley Fool owns shares of Oracle. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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