Oracle Rising

Sarah Lacy

Well, look who’s the new belle of the software ball. Oracle Corp. held an investor luncheon in New York yesterday and the timing couldn’t be better for Chuck Phillips & Co. (Yet again, the elusive Larry Ellison wasn’t in attendance.)

SAP—and a host of others—had warned or reported worse than expected second quarter results. Meanwhile, Oracle is still basking in the glow of a stellar fourth quarter—when applications and databases both did well and it wasn’t just because a big acquisition was inflating the numbers.

Now, with the rest of software seeing big deals slip in the wake of rising oil prices and middle east warfare, and IBM even hinting that IT spending is on the decline, Oracle is starting to look pretty good. Yes the same Oracle who’s stock price has been stuck in $12 land for years.

Among the highlights from the smattering of analyst reports that landed in my inbox today is one by Brent Thill of CitiGroup He still rates the stock a hold, but says there are “early signs” that Oracle is gaining market share on “nemesis SAP.” Wait! Is this the same Brent Thill who delighted SAP execs last December with his research that Oracle was actually losing application market share via its acquisition spree, not gaining it? The same Brent Thill that SAP’s executives suggested reporters go to for the real story? According to my email archives, yes.

OK, so how much of this is good-old-fashioned Wall Street bandwagon jumping to be reversed as soon as SAP reports a good quarter, and Oracle stumbles? Well, even before today—when it matched its 52-week high at $15.21 per share—the stock has looked better in 2006. Investors in general are comforted that the big deals—and all the uncertainty that comes with them—seem to be done for now. But the real test will be Oracle’s first quarter. It has missed it three years in a row. If it makes it this year, SAP may start losing some of its Wall Street fan boys.

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