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Oracle of Profits

ORACLE (ORCL)

Makes software for running businesses. Purchase of BEA Systems expands offerings to include middleware -- software that helps different programs speaks to each other.

Reports Q3 earnings Wednesday 3/26 at approx. 405p ET. Conference call at 5p ET.

Oracle's headquarters in Redwood City, California.
Paul Sakuma
Oracle's headquarters in Redwood City, California.

WHAT WILL MOVE THE STOCK:

ECONOMIC IMPACT - What is the weakening U.S. economy doing to demand for Oracle's products? Yesterday, FBR Research's David Hilal said American economic woes will limit upside for Oracle. However, he also noted about half of Oracle's business comes from outside the U.S.

NARROW ESTIMATE RANGE, RISING FORECASTS - All 20 analysts tracked by Thomson Financial are expecting profits of either 29, 30 or 31 cents per share -- a far cry from the wide range of estimates for financial companies. The trend is towards higher estimates: no analyst has cut Q3, Q4 or fiscal 2008 earnings estimates this year. On March 14th, Deutsche Bank said it expects Oracle will beat its estimate of 31 cents per share. But...

WHAT HAPPENS NEXT? - Deutsche Bank kept its "hold" rating on Oracle, saying it remains cautious about the software company in the long run. However, Merrill Lynch raised its rating on Oracle to "buy" on March 6th.

BEA UPDATE - Oracle agreed to buy BEA Systems for $8.5 billion in January. Is the deal still on track to close later this year?

ESTIMATES:

Q3 Estimates: EPS up 21% to $0.30, revenues up 22% to $5.422 billion

Q4 Estimates: EPS up 19% to $0.44, revenues up 15% to $6.739 billion

FY 08 Estimates: EPS up 26% to $1.27, revenues up 21% to $22.121 billion

Source: Thomson Financial

Year-ago actuals: Q3 EPS $0.25, Rev. $4.449 billion

FACTOIDS:

NOT THE BUSY SEASON - The first three months of the year are usually the weakest quarter for business software companies.

CRAMER SAYS - On both March 11th and March 5th, Jim Cramer said he likes Oracle.

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