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Oracle's Numbers: Almost Too Good To Be True (But They Are)

Oracle'ssecond quarter financials are stunning by just about every measure. Everyone I had spoken to leading up to these numbers knew the news was going to be good, but no one expected the news to be this good.

Oracle's 31 cents in earnings per share blew past Wall Street's expectations of 27 cents. Pacific Crest Securities' Brendan Barnicle anticipated 28 cents and told me anything north of 29 cents would be significant. Ok. Well, this is significant. Further, Oracle's top line is staggering. The company beat the Street by nearly $300 million, and Pacific Crest's estimates by $200 million.

So where is all this good news coming from? Looking back over Oracle's historic performance, this is the best quarter the company has seen in almost a decade. And you can thank the blistering acquisition hunt this company has been engaged in since 2004. Since then, Oracle has added more than $40 billion in market cap and the strategy is clearly paying off on the top and bottom lines.

Total new licenses soared 38 percent, to over $2 billion, the best growth since 1998. The best estimate I saw on the Street was something closer to 27 percent. Database and middleware new licenses, Oracle's real engine for growth? They jumped 28 percent, with Oracle claiming to steal share from IBM in both categories. Analysts projected 22 percent growth. New applications licenses? Up a whopping 63 percent when analysts expected something closer to 35 percent.

These are blockbuster numbers to be sure and could go a long way toward beefing up big cap tech which has been under some pressure these last few weeks. Many of the biggest in big caps are well off their November highs, thanks to concerns about a recession in this country.

But the opposing view has it that the rising global economy, a technology renaissance overseas, could eclipse any bad news that might materialize in this country. Oracle's numbers seem to indicate that despite serious weakness with big financial customers, Oracle is still seeing dramatic increases in every measurable metric.

This will all come down to guidance; what Oracle sees globally and domestically and we should have that shortly. Pacific Crest has a $27 target on these shares. We'll see if that target holds up. Meantime, this is a company firing on all cylinders. The quarter was extraordinary.

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