Oracle (ORCL) expects strong quarterly earnings

Posted Mar 26th 2008 11:24AM by Eliza Popescu
Filed under: After the Bell, Earnings Reports, Forecasts, Oracle Corp (ORCL)

Shares of Oracle Corp. (NASDAQ: ORCL) are trading slightly lower today as traders prepare for the company's third quarter earnings release. The company is scheduled to report its recent quarterly numbers today after the market closes.

When the company announces its earnings, analysts are expecting to see earnings excluding items of 30 cents on sales of $5.4 billion, up from 25 cents a share and $4.41 billion in revenue reported in the same period a year ago.

Despite the weak market conditions and economic slowdown, Oracle has so far been able to beat or at least match analysts' expectations when it has reported earnings. For the current quarter, the company also expects strong earnings results. This might be due to the company's recent acquisitions whose maintenance revenue help offset weak earnings coming from its customers affected by the tumbling economy.

The most recent acquisition was made at the beginning of this year when the business software giant paid $8.5 billion to purchase BEA Systems Inc. (NASDAQ: BEAS). Oracle is expected to close the BEA acquisition later this year.

Analysts are optimistic about Oracles' earnings and believe the company's acquisition strategy will be able to surpass the "challenging economic environment." One analyst at FBR Research, David Hilal, told investors in a research note that he expected a good quarter from Oracle. He cited its "ability to provide the most complete enterprise software stack" which "is emerging as its strongest competitive advantage."

Hilal is not the only analyst that is expecting a good quarter from the company. Jeff Gaggin, from Avian Securities, is expecting to see the company's outlook for its earnings "relatively upbeat in light of the economic slowdown in the U.S."

Oracle's earnings tonight will help us get a better idea of the effects of the credit crisis on major companies. The weakening economy put pressure on the company's stock price which tumbled during the first months of this year. A good quarter could reassure traders' over Oracle's ability to withstand the challenging environment.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

Tags: BEA Systems, beas, BeaSystems, business software, BusinessSoftware, earnings, Oracle, orcl