UBS Maintains Positive Stance on Oracle (ORCL)

CONTRIBUTOR http://notablecalls.blogspot.com

UBS comments on Oracle (NASDAQ: ORCL) ahead of results and following yesterday's decline in stock price saying they are modeling rev & EPS of $4.16b & $0.22 and $1.24b in new software sales (all in line). Firm's lic est represents 18% y/y growth (guidance 15-20%). They believe lic growth could fall in 16-17% range, but expect the tone of the call to be positive, as checks suggest that some large deals were delayed due to ORCL holding firm on pricing where there is little risk of losing deals to a competitor.

Firm is modeling F2Q07 db lic rev of $879m & believe dbase lic growth in the 9-10% range is very reasonable & would likely be viewed as a decent showing. They are modeling total app lic rev of $364m. Strength from unlimited support could offset some of the spending delays on the db side, despite that a few of the large deals they were tracking that were subsequently delayed also had an app component.

Despite what is likely to be choppy trading over the next week, and potentially post the quarter (depending on where sentiment shakes out) they continue to see potential upside to CY07 EPS estimate of $1.05. While the firm does not believe the sky is falling, they do expect the shares to be volatile through the print.

Maintains Buy and $21 tgt.

Notablecalls: Not actionable but good to know category

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