Q&A: Oracle (ORCL)

Hi Eddy,
I like your blog and I find it very informative. What’s your opinion of ORCL? I bought some share around 10…do you see it going much higher?

Thanks for the nice words. With Oracle (ORCL), there’s always one key rule I have: Larry Ellison is nuts. Not in a bad way, mind you. I love Larry. He’s a genius, but he’s also a bit nuts. Look at his track record. He named Oracle’s first database Oracle 2, so people would think that all the bugs had been fixed. That’s brilliant, but think of the kind of person who thinks that stuff up. This is a guy who’s been repeatedly fined by his local airport due to the noise from his private jet. I mean, you have to admire that.
The Larry factor filters down to the company and therefore, the stock. Oracle has made two huge acquisitions recently, and I can’t stand acquisitions. I’m terrified of what Gillette will do to Procter & Gamble (PG), and vice versa. Pfizer’s (PFE) mergers have caught up with them. The same with Citigroup (C). Oracle first bought PeopleSoft and now, they’re buying Seibel (SEBL).
The company canceled its analyst day yesterday. It might be nothing, but it’s certainly not a good thing. On top of that, analysts have been paring back their estimates for this year and next. Oracle is one of those stocks that appears to be cheap, but really isn’t. The current price assumes the kind of performance that Oracle has had, not will have. I’m very doubtful Oracle will be able to digest these acquisitions smoothly. Just look at the Pfizer news today. A few years ago Pfizer looked unbeatable.
You’re lucky to have gotten Oracle at $10, but I don’t see much upside from here. Oracle is a sell. Any of the stocks on our Buy List are better.
Thanks for all the e-mails. Please keep them coming!

Posted by on October 20th, 2005 at 3:21 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.