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Strong results revive Oracle

Strong results revive Oracle

Oracle's stock price bounced back last week after the company announced strong year-end financial results, but some analysts remained cautious over a potential slowdown in revenue because of year 2000 issues.

For fiscal 1999, which ended May 31, Californian-based Oracle (Nasdaq:ORCL) reported revenue of $US8.8 billion and net income of $US1.3 billion, or 87 cents per share, compared with revenue of $US7.1 billion and net income of $US955 million, or 67 cents per share, for fiscal 1998, excluding one-time charges.

For the fourth quarter, Oracle reported earnings of 36 cents per share on revenue of $US2.9 billion and net income of $US527 million. The revenue and net income figures represent increases of 22 per cent and 31 per cent, respectively, over the same period last year. Analysts had predicted Oracle would post earnings of 32 cents per share for the fourth quarter.

Last week, Oracle announced plans to cut 325 jobs -- a decision the company said was part of its move to conduct all of its business via the Internet. A source said the layoffs were likely to be in Oracle's server deployment area, which won't be needed as Oracle shifts to the electronic-business model.

The earnings news and layoff announcement jump-started Oracle's stock price, which closed last Wednesday at 32 15/16, up 7 13/16 points.

But some analysts are still cautious about Oracle's short-term prospects, citing a potential slowdown as companies stop new purchases because of the Y2K issue. "There are a lot of risks with Oracle's short-term [outlook]," said analyst Brain Goodstadt at Standard & Poor's Equity Group in New York, who continues to have a Hold rating on Oracle.

But Jean Orr, an analyst at Nutmeg Securities in Connecticut, says the Y2K issue has passed for Oracle. She says the company should see some stock price improvement by year's end.

And Michael Murphy, editor of the California Stock Letter in California, says buying Oracle now would be a steal. "You rarely get a chance to buy one of the five dominant companies cheaply, yet right now both Oracle and [Intel] are very attractive," Murphy said.


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