Full 360-Degree Oracle Earnings Preview (ORCL, INTC, CSCO, SAP)

Oracle Corporation (NASDAQ: ORCL) is going to be an important earnings report for after the close.  The company now has some hardware component sales after the Sun Microsystems bailout, something which may be more of a concern now that Intel Corporation (NASDAQ: INTC) confirmed its earnings warning we had been expecting.  Another aspect to remember is that Cisco Systems, Inc. (NASDAQ: CSCO) fights for an entirely different spending dollar in most cases around enterprise-IT spending but these companies often mirror each other because so many customer trends are overlapping and identical and each is the clear leader in their primary operations. 

As always, we would look for the company to make a statement that it continues to win away business from SAP AG (NYSE: SAP).  Is that a permanent or secular trend that will remain?

Thomson Reuters has estimates of $0.57 EPS and $9.23 billion in sales.  For the next quarter, the estimates are $0.59 EPS and $9.46 billion,  It is unlikely that we will get any fiscal estimates but the May-2012 fiscal consensus estimates are $2.41 EPS and $38.64 billion in sales. It is worth noting that the earnings estimates, despite a very strong U.S. Dollar and a very weak situation in Europe, have not really come down in the last 90 days or so.

Using the weekly options, options traders appear to be braced for a share price move of about $0.90 to $1.05 in either direction.  The chart from stockcharts.com below should show much of the picture.  Shares have been weak.  There is big resistance ain the $231 to $32 range that had been seen last week and the week before and the stock failed that level.  Another technical analysis aspect is that Oracle’s stock has the 200-day moving average up at $31.37 and its 50-day moving average at $31.27.  That puts most of the prior $31 to $32 resistance more likely in the $31.00 to $31.30 range now. 

If something bad is reported, there could be nothing but dead air underneath the stock down to $27.50 or even down to $27.00 before even lower support would come into play around $26.40 and then closer to $25.00.

As far as analyst calls, the consensus price target objective from Thomson Reuters is still up at $36.49.  That is just a penny shy of its 52-week high.

For some outside notes we would note what WhisperNumber.com sent to us: “The whisper number is $0.56, one cent behind the analysts estimate.  Oracle has a 62% positive surprise history (having topped the whisper in 31 of the 50 earnings reports for which we have data).  The average price movement (starting at next market open) within ten trading days of these fifty earnings reports is +0.6%.  The strongest price movement of +1.7% comes within ten trading days when the company tops the whisper number.  Last quarter the company reported earnings one cent ahead of the whisper number.  Following that report the stock realized an 8.2% gain in thirty trading days.

At $29.15 after a 1.9% rise today, the 52-week trading range is $24.72 to $36.50.  Kep in mind that even with shares down more than 15% from the 52-week high that Oracle has a market capitalization rate of some $147 billion.

JON C. OGG