Oracle (ORCL) has time and again reiterated its emphasis on profitability. Oracle acquired Sun Microsystems in early 2010 with a view to strengthen its portfolio of products. Sun was a loss-making company at that time, and reported an operating income loss of $2.24 billion for fiscal year ended 2009. This is why Oracle could buy Sun Microsystems at a relatively cheap valuation of $7.4 billion.

However, Oracle seems to have converted the losses incurred by Sun Microsystems to profits. By leveraging Sun's technology, Oracle is trying to come up with a superior product portfolio and maintain an edge over competitors SAP (SAP), Microsoft (MSFT), IBM (IBM) and Hewlett-Packard (HPQ).

Oracle (ORCL) is one of the largest software player in the world, and competes withe SAP (SAP), Microsoft (MSFT) and IBM (IBM) in this market. After acquiring Sun Microsystems in 2010, Oracle became a hardware player as well with products pertaining to enterprise servers and storage hardware business. It competes mainly with IBM and HP (HPQ) in the hardware business.

Here we will analyze the three most important segments for Oracle and the value that each contributes to our $37.94 price estimate for Oracle stock. Our price estimate stands about 20% above market price.

Shares of software giant Oracle Corp. (ORCL) traded higher after the market closed Thursday as the company reported fiscal third-quarter earnings above analyst estimates.

Going into this afternoon's earnings report, analysts had been expecting to see Oracle report earnings of 50 cents per share. Excluding one time items, Oracle stated that its quarterly earnings were 54 cents.

If, as outlined in January, you took some profits off the table with enterprise software leader Oracle Corporation (ORCL) (first discussed here on April 7, 2009 at a price of $18.54) you made the correct move: the stock has pulled back slightly, to about $31.

That said, those investors who missed the the April 2009 entry point can take advantage of the recent dip to consider the shares, as it looks like Oracle's is headed to $40 and beyond.

Oracle's FY2011 revenue should surge about 30% to 35%, aided by hardware systems and support sales gains via acquisitions.

IBM (IBM) sells middleware software and technology services such as outsourcing and integration to large and medium sized businesses worldwide, and competes with firms like Oracle (ORCL) and Red Hat (RHT). IBM is also among the global leaders in business systems and competes with hardware vendors like Hewlett-Packard (HPQ) and Dell (DELL) in the server market as well as firms like EMC (EMC) and NetApp (NTAP) in the storage market.

In a recent development, IBM announced the launch of a new software and consulting service targeted at helping companies swiftly adapt to rising customer demands in today's digitally transformed marketplace. The firm chooses to call this new emerging category "Smarter Commerce," keeping in line with its Smarter Planet initiative. We have earlier discussed IBM's focus on its Smarter Planet initiative and how the firm stands to benefit from it. (See IBM's Smarter Planet Initiatives Lay Groundwork for Growth.)

Quarterly reports from Oracle (ORCL), Discover (DFS) and Tiffany (TIF) will highlight news on the earnings front this week.

Elsewhere on the economic calendar, the focus will be on housing, with existing home sales data due from the National Association of Realtors on Monday, new home sales numbers from the Census Bureau on Wednesday and data on housing starts released on Thursday.

Also watch for durable goods orders in February and the final GDP for the fourth quarter.

Analyst Upgrades

• Goodyear Tire (GT) to Overweight from Underweight at Morgan Stanley.
• Salix (SLXP) to Outperform from Market Perform at Wells Fargo.
• Euroseas (ESEA) to Outperform from Market Perform at FBR Capital.
• Norfolk Southern (NSC) and Hexcel (HXL) to Outperform from Sector Perform at RBC Capital.
• BB&T (BBT) and Triangle Capital (TCAP) to Buy from Neutral at Janney Capital.
• Mobile TeleSystems (MBT) to Outperform from Neutral at Credit Suisse.
• Affymax (AFFY) to Buy from Hold at Auriga.
• Vanguard Natural (VNR) and Tortoise Energy (TYY) to Outperform from Neutral at RW Baird.
• Protective Life (PL) to Neutral from Underperform at BofA/Merrill.

We recently held a discussion with SAP (SAP) about the company's growth prospects, highlighting opportunities in on-premise, on-demand and enterprise mobile software markets (on-device). On-demand is a fast growth market, in which SAP competes with players like Salesforce.com (CRF), Oracle (ORCL) and Microsoft (MSFT).

We also discussed the prospects of in-memory technology and its potential advantages over traditional relational database technology, like competitor Oracle's Exadata machines.

Analyst Upgrades

• Abercrombie & Fitch (ANF) to positive from neutral at Susquehanna.
• tw telecom (TWTC) to outperform from neutral at Cowen.
• Agree Realty (ADC) to buy from neutral at Janney Capital.
• Millicom (MICC) to buy from neutral at Nomura.
• BioMed Realty (BMR) to outperform from market perform at FBR Capital.
• Realty Income (O) to buy from neutral at BofA/Merrill.

Enterprise software leader Oracle (ORCL) which I first wrote about on April 7, 2009, at a price of $18.54, has uptrend in undulating fashion to about $32. Now may be a good time to consider taking some profits if you're in at $19 or below.

However, those investors who can tolerate the risk can maintain their full position with ORCL, but keep in mind the journey to $40 may not be completed in 2011.

Look for Oracle's FY2011 revenue to increase about 30% to 35%, aided by hardware systems and support sales gains via acquisitions.

Red Hat (RHT), an open-source software business whose colleagues include Microsoft (MSFT) and Oracle (ORCL), experienced some selling pressure in yesterday's extended-hours session. The stock was off by 2.7% to $46.60. Still, the company is closer to its 52-week high of $49 than its 52-week low of $26.51.

And if you look at the chart, you'll see that the shares have been in an uptrend following a period of sideways movement. Should an investor buy this uptrend? Is yesterday's selling action a temporary phenomenon?

When it comes to cloud computing, Oracle (ORCL) has been late to the party. After all, even Microsoft (MSFT) has a growing position in the space.

But Oracle appears to be ramping up things. That is, the company has launched Oracle Cloud Office. Based on technology gained from the Sun acquisition, this offering has the full suite of web-based apps for word processing, spreadsheets, presentations and databases.

Analyst Upgrades

• Oracle (ORCL) to outperform from perform at Oppenheimer.
• Accenture (ACN) to buy from hold at Jefferies.
• Advanced Energy (AEIS) and Applied Materials (AMAT) to overweight from equal weight at Barclays.
• Spreadtrum (SPRD) to buy from hold at Auriga.
• Healthcare Realty Trust (HR) and Tortoise Energy Capital (TYY) to outperform from neutral at RW Baird.
• Global Payments (GPN) to equal weight from underweight at Morgan Stanley.
• CBS (CBS) to buy from neutral at BofA/Merrill.
• Sonic (SONC) to outperform from neutral at Cowen.

Share of Oracle Corporation (ORCL) are up sharply in after hours trading following this afternoon's fiscal second quarter earnings report.

As we noted in our earnings preview earlier today, analysts had been expecting to see Oracle report Q2 earnings of $0.46 per share. Actual earnings came in above expectations at $0.51 per share, excluding special items.

Analyst Upgrades

• Wynn Resorts (WYNN) to overweight from neutral at JPMorgan.
• Oracle (ORCL) and Alliance Data Systems (ADS) to outperform from neutral at Macquarie.
• Saint Joe (JOE) to outperform from market perform at Keefe Bruyette.
• Starwood Hotels (HOT) to neutral from underperform at RW Baird.
• Middlesex Water (MSEX) to buy from neutral at Janney Capital.
• Consol Energy (CNX) to buy from hold at BB&T.