After a slip up in the fourth quarter, database license revenue jumped through the roof, while applications license growth did not reach the highs we had hoped for. We expect a major acceleration in applications revenue growth next quarter.
The stock is now trading at 42 times next year's earnings estimates, a huge discount to where it has traded over the last six months.
We believe that the chances of Oracle hitting consensus estimates for its May quarter are low.
Most importantly, PeopleSoft blew away the license revenue number, which we believe is the more important indicator of a turnaround.
Although it's still early in the quarter, we worry that what is typically a strong quarter for Oracle could prove to be unusually weak given the tough U.S. macroeconomic environment and potentially weakening conditions in International markets.
Given our expectations of a solid quarter and an upbeat conference call, we believe Oracle represents a good near-term play. If we are right, Oracle's results could spur an upward move in the overall software sector as a whole, a sector that has clearly been under pressure lately.
Apparently, more Sun servers are sold running Oracle software than anything else. Weak results and guidance from Sun only serve to compound our near-term worries.
I think for the entire sector, the $1,000 PC is really going to be a major driver.
