Oracle (ORCL) Gains Could Accelerate on Further Enterprise Cloud Push

Oracle (NYSE: ORCL) is on watch following positive commentary in Barron's last weekend.

According to the report, Oracle should be on track to mimic a similar revival seen by peer Microsoft (Nasdaq: MSFT) in recent years. The company is transitioning from one that offers software and hardware for businesses to install on their networks, to one that offers software applications over the Internet.

One of the bigger risks for Oracle is replacing long-term, upfront, large licensing fees with smaller, shorter-term subscription sales.

While Oracle's stock performance has lagged versus peers and the S&P 500 over the last two years, investors are hopeful the change will take hold. Last October, Oracle debuted cloud-based products like those used for in-memory processing and multi-tenant applications to its customer base.

Oracle said last November with its Q215 report that new subscription sales reached $170 million and the company was on a $250 million per quarter rate by Q415.

Oracle also has its name behind the product; while large enterprises would prefer not to disrupt their IT operations, they may move more into the cloud over the next several years and would prefer to do so with a name they are familiar with, versus starting over with a company that is less tested.

Should the plan keep the stock in standstill mode, Oracle has $45 billion of cash it can use to do acquisitions.

The company should earn $2.94 per share in the current fiscal year and move to $3.17 per share in FY16.

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