Oracle up after analyst meeting, Microsoft ruling

Lisa Baertlein

PALO ALTO: Shares of Oracle Corp. rose more than six per cent on Thursday,

one day after the No. 2 software maker pledged a return to its trademark

feistiness and repeated positive views on its current quarter.

Oracle's stock closed up $1.14 at $19.18 on the Nasdaq exchange.

The movement came as Standard & Poor's computer software index chalked up

a gain of 26.16, or nearly 3 per cent, to close at 918.65. The sector lifted on

a US appeals court ruling on Thursday morning, which overturned a lower-court

order that would have chopped industry titan Microsoft Corp. in two. The order,

however, left standing the lower court's finding that Microsoft holds a monopoly

in personal computer operating systems and that some of its competitive

practices amounted to an illegal use of that monopoly.

Analysts unmoved by bullishness



Oracle chief executive Larry Ellison and chief financial officer Jeff Henley on
Wednesday told analysts gathered for an annual meeting at the company's Redwood

Shores, California, headquarters that Oracle saw corporate America's technology

spending slowdown hit bottom during its fourth quarter ended May 31. They also

said that some of the big deals that crumbled as a result of that economic

pressure have been resuscitated.

The executives also said they were deploying aggressive campaigns against

International Business Machines Corp. in databases, with BEA Systems Inc. in

application servers, and with Siebel Systems Inc. in customer relationship

management software.

"Management seems reinvigorated by its newfound thirst for blood on the

competitive front," Merrill Lynch analyst Chris Shilakes wrote in a note to

clients. "Through its history, Oracle has thrived on confrontation and has

left a number of companies in its wake - e.g. Sybase, Informix, Baan, JD

Edwards," Deutsche Banc Alex. Brown analyst James Moore wrote in a research

note.

Analysts maintain ratings



Analysts, however, have heard such bullish comments before. They maintained
their ratings on Oracle stock, saying that the optimism may be premature.

"Lots of hype, but little evidence of better execution/products," Banc

of America Securities analyst Bob Austrian wrote in a note on the company's

analyst day event.

"Management still believes the domestic (information technology)

spending slowdown has bottomed. No compelling data points to confirm,"

Austrian said.

Oracle currently is in the first month of its traditionally slow fiscal first

quarter. The company, like many other software makers, closes many of its key

deals in the final days of its quarters and gets a significant portion of its

revenue during its fourth quarter.

Shilakes maintained his forecast for flat revenue growth for first half of

Oracle's fiscal year 2002 and said he expects revenue to accelerate in the first

half of calendar 2002. Three things that should help boost sales, he said, are

that Oracle's new software products will be more mature, the company's

referenceable customer list will be larger and the global economy is expected to

stabilize.

Moore maintained his long-term "buy" rating on Oracle, although he

said the softening economy in Europe, which he said accounts for 30 per cent of

Oracle's business, remains a wild card. At WR Hambrecht and Co., analysts Rich

Peterson and Robert Matule Jr. reiterated their "neutral" rating on

Oracle, saying that they continue to see pricing pressure on Oracle's core

database business from Microsoft and IBM.

(C) Reuters Limited 2001.