Global CIO: Why Oracle's Earnings Will Improve With SunGlobal CIO: Why Oracle's Earnings Will Improve With Sun

**"For many years Oracle has denied naysayers who predicted an end to their growth. Looking at Oracle through the lens of the EDMP, Inc. F.A.S.T. Graphs illustrates how well managed they have been."

**"It's interesting to see how closely stock price followed earnings, with two notable exceptions. First, the irrational exuberant period that started in 1999, peaked in August of 2000 before brutally and swiftly reverting to the mean by May of 2002 is stunning. . . . Second, the severe fear driven price drop in 2008 even though earnings remained strong depicts irrational investor behavior to the opposite extreme. . . . "

**"Figure 3 below shows the performance that Oracle shareholders would have received since 1/31/1996 relative to owners of the general stock market (S&P 500). Strong operating results rewarded long-term holders even though Oracle’s stock price remains historically undervalued."

**"Remarkably, Oracle has grown earnings at the same high rate in excess of 20% for the past five years as it has the past 15 years (see yellow highlights to the right of Figures 2 & 4). Also, notice the correlation of price to earnings once again."

**"Building on their Exadata offering, the Sun Microsystems purchase expands on Oracle's goal of offering high-end and also high-margin differentiated integrated systems. Although the Sun Microsystems’ acquisition provides Oracle several avenues for growth, they have not stopped there. Since the Sun transaction, Oracle has announced several additional purchases." Carnevale then notes that Oracle has "over $20 billion of cash on hand and the continued ability to generate more."

The significance of Carnevale's analysis of Oracle's historical performance is reflected in the company's relentless strategy of acquiring companies to round out its product lines, increase its revenue, and boost its market share. If any company knows how to profitably acquire and integrate companies, it is Oracle: in just the past five years, it has snapped up an astonishing 57 companies, or about one acquisition per month.

Of course, the success of those past integrations don't guarantee that the Sun takeover will follow suit, but it does provide an awfully strong indicator. And Carnevale's post also includes a long and deeply detailed overview of Oracle's current product set, business units, and customer sets.

But by all means, have a look at the naysayers' positions before making your final decision on whether you feel Oracle-Sun will be a winner—you can read all about those positions in the articles listed below. And next week, we'll be offering our own detailed analysis of Oracle's quarterly results.

RECOMMENDED READING: Global CIO: Oracle-Sun A Bad Deal? Only A Fool Would Say That Global CIO: Oracle CEO Larry Ellison's Top 10 Reasons For Buying Sun Global CIO: Oracle Needs More Than Ellison's Talk To Beat IBM's Systems Global CIO: IBM Calls Out Oracle's Ellison On Database Claims Global CIO: Oracle CEO Larry Ellison On The Future Of IT Oracle-Sun Layoff Prediction: Hold Analyst Accountable Global CIO: Why Oracle's Larry Ellison Will Tell The EU To Pound Sand Global CIO: Where Do Oracle's Profits Come From? Bob Evans is senior VP and director of information's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at [email protected].