February 25, 2009 - Oracle Corporation (ORCL-NASDAQ) an enterprise software company, engages in the development, manufacture, distribution, servicing, and marketing of database, middleware, and application software worldwide.

Its Software License Updates and Products Support segment offers customers with rights to unspecified software product upgrades and maintenance releases, and Internet access to technical content, as well as Internet and telephone access to technical support personnel.

The company's Consulting segment designs, implements, deploys, and upgrades database, middleware, and applications software.

Its On Demand segment provides multi-featured software and hardware management, and maintenance services for clients deploying its software products; and support centers, assistance, technical account management, configuration and performance analysis, personalized support, annual on-site technical services, and other related services.

The company's Education segment offers online courses and self paced media training on CD-ROMs. It distributes products and services to resellers, system integrators/implementers, consultants, education providers, Internet service providers, network integrators, and independent software vendors. The company was founded in 1977 and is headquartered in Redwood City, California.

You have to go back to 2002 to see earnings fall. They went from 46 cents a share in 2001 to 39 cents. Since then, every year shows a larger number. In 2008, earnings were $1.30. For 2009, analysts expect $1.42, then $1.54 in 2010. Here's a company that's still growing, in spite of all the economic hardships.

Credit some of that to recurring revenue. ORCL's software license update and product support revenues were almost 50% of sales in 2008. It's a very profitable part of the business. As new databases and applications are sold, licensing and support revenues grow, and renewals for existing customers are very high. That's the very core of the company's success and will continue as software only becomes more critical to business efficiencies.

One negative for the bottom line is a stronger dollar. Foreign sales were 57% of total revenues in 2008. They were also 50% of pretax profits. In the November quarter (fiscal year ends in May), the strong dollar cut revenue growth by 7% and took 3 cents a share off earnings. The dollar's strength will be a factor for at least a few more quarters.

Another problem: the credit crunch and economic slowdown. Oracle isn't exempt from the real world. Buyers often borrow to add software. With banks and credit markets extremely tight, finding the money to purchase new software is almost impossible. And with most businesses seeing a slowdown in sales, purchasing anything, including software, is difficult.

The good news comes from the company's diverse revenue and customer base, its large product list, global reach, and a wide industry appeal. One of its competitive advantages is the ability to offer a full line of software, from database to industry-specific applications, allowing customers to consolidate systems, thereby reduce complexity and expenses. Furthermore, with its strong cash flow, the company has added many new software companies to its portfolio, broadening its products and cross-sell opportunities for existing software and services.

More numbers: Market Cap is $82.35 billion. Forward P/E is 10.6. Return on Equity is a stellar 27.3%. Operating margin for the last 12 months was 36.28% and Profit margin was 24.44%. Price to Book is 3.63. Cash is $10.65 billion, putting Cash per share at $2.11. Total debt is $11.24 billion. Current ratio is 1.9. Book Value is $4.523. There are 5.05 billion shares outstanding and a float of 3.87 billion. Insiders own 22.83% of the stock. Institutions own 60%. The CEO, Lawrence Ellison, owns 22.6% of the stock (included in the insiders number). There is no dividend.

The company is managing to grow in spite of difficult times. With a large cash position, it can buy software companies, buy back shares or start a dividend. When the economy does recover, and it will, Oracle will be in a strong position to increase sales and profits as businesses start to spend on software again. Check into Oracle if you're looking for a strong survivor.

- Company Web site: www.oracle.com

- Ted Allrich