posted 04-25-2000 10:48 AM         

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Worth magazine ranked Larry Ellison #14 on its top CEOs list. Here's what they said:

"Like roller coasters? Invest in Oracle. Lately, Oracle shareholders have enjoyed a very pleasant ascent, their stock rising about 300 percent in 1999 alone. But it's not just stock performance that vaults Larry Ellison into the top third of our list, from nowhere last year. Ellison seems to have set aside his other interests--yacht racing, Asian culture, beautiful women--just in time to benefit from a huge, Internet-related surge in demand for Oracle's stock-in-trade: software to manage huge amounts of data. Oracle is in the New Economy's sweet spot, as businesses clamor for the company's business-to-business products, E-commerce applications, and tools for wireless devices. And Ellison's longtime cause, network computing, is becoming a reality in the form of handheld, wireless devices with Web access. BUSINESS PHILOSOPHY: To heck with cooperation, this means war. He's obsessed with toppling number one software company Microsoft from its perch, but occasionally trains his guns on other competitors as well. TRUE STORY: An underground classic in Silicon Valley is a little book called The Difference Between God and Larry Ellison. God, it turns out, does not think he's Ellison. But Ellison, well . . . MANAGEMENT STYLE: A big-picture guy all the way. He leaves day-to-day management issues to two trusted lieutenants. INTERNET STRATEGY: To be the company that makes the software that runs E-commerce. The largest retail sites are all powered by Oracle, most large Web sites use Oracle database products, and the company is investing heavily in ventures for wireless data devices. Ellison is creating a network within Oracle as well, linking international offices and sharing sales, marketing, and other data. The effort has already saved the company about $1 billion. HOW HE GOT THE JOB: Has been with Oracle since the beginning. Established himself as top job with a spectacular sales performance. PERSONAL STRENGTHS: A rare blend of technology savvy and super salesmanship. WEAKNESSES: Not the most popular guy in the Valley. Loquacious, opinionated, abrasive, given to missing product- introduction deadlines. Until last year's decision to work 50-hour weeks, rarely showed at the office before 10:00 a.m. PASSIONS: Ocean yachting, piloting jets, fitness, fine arts, Asian culture, women. Frequently listed among the most eligible bachelors in Silicon Valley. FINANCIAL REWARD: His Oracle options are worth almost $240 million. Oh, and his Oracle shareholdings are worth more than $52 billion."

posted 02-23-2000 09:58 PM         

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Gatsby,
I believe Warren Buffet's Sustainable Growth Model can be applied to any company that has a sustained track record of positive earnings, cash flow, and return on equity, even if he didn't intend to use it on tech stocks. I have heard that Mr. Buffet doesn't like tech stocks because he believes the required R&D expenses are unpredictable. Frankly, I think he is making a mistake by not investing in some higher quality tech stocks with good brand names, like Microsoft for example. I'm sure he and his buddy, Bill Gates, argue about that all the time.

Analyzit

posted 02-17-2000 08:43 AM         

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quote:

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6. According to Warren Buffet's Sustainable Growth Rate Model, ORCL appears to be about 30% undervalued. This puts ORCL smack in the middle of the BUY range.

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Analyzit, I don't doubt that Oracle is a buy. But I thought Buffett's Model didn't apply to tech stocks? If it did, why has he stayed out of the entire industry?

posted 02-16-2000 09:19 PM         

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Spreadsheet Analysis on Oracle Corp.

If anyone's interested, I put together a valuation spreadsheet on Oracle using data from Value Line.

Some interesting observations include:
1. Revenue and earnings growth appear to be slowing, hopefully ORCL can turn this around with new web based initiatives.
2. 1996 was ORCL's best year in terms of profitability, but their margins are holding steady at still reasonably good levels.
3. Debt is minimal and cash position is excellent in relation to liabilities.
4. No standing inventory to worry about managing, receivable management shows strong improvement over the last year, and the Current Flow Ratio (aka Foolish Flow Ratio) shows excellent cash management at 0.87.
5. ORCL has maintained a very respectable Return on Equity in the +/- 40% range, and market valueation has grown well in excess of retained equity and capital investment (a key Buffett requirement).
6. According to Warren Buffet's Sustainable Growth Rate Model, ORCL appears to be about 30% undervalued. This puts ORCL smack in the middle of the BUY range.

You can check it out at http://members.xoom.com/analyzit/ORCL.htm
Any comments in response?

posted 01-21-2000 11:56 AM         

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Here are some great excerpts from a recent interview with CFO and ExVP Jeff Henley:

Forward Looking: "One of the things we've announced is that we're turning Oracle internally into an e-business company. We think that within 18 months to 24 months that we can save up to $1 billion annually. We think that will be a great testimonial toward the full integration, full use of this entire suite. So the earnings growth will help our stock but it will also be a great testimonial to customers as to the value of reinventing their entire company. We've had five quarters now of margin expansion, the last quarter being the largest, and we think there's much more to come. We're definitely seeing some incremental improvements along the way of a several-year project. Again we've probably got another year and a half, maybe two, to finish everything."

Streamlining: "One that's very easy to understand is just information technology. We have a project to basically collapse all of our 60 countries onto a single data center here in the U.S. That's going to save probably $250 million of the $1 billion. It's a lot of work to get there, but having a real simple central location to service 60 countries gives us efficiency. Also, as we roll out new applications or upgrade applications, we can instantly offer that to every Oracle employee in the world. We've also launched an Internet store that will be much like Cisco's (Nasdaq: CSCO) [method of selling products online]. We've figured about the same numbers: We think about 80% of our transactions can be conducted online when it's fully rolled out. We have 6,000 people around the world in call centers and we think we can improve the productivity of the service organization probably 50%. There are massive opportunities in sales and service as we change out all of our old legacy CRM applications to the new breed of CRM that we offer our customers, and centralize all that customer data."

What investors whould look for: "Obviously, sales growth is always important, and you always have to understand what's making up the growth. Certainly license revenue is very important for a software company to focus on. The idea is to try to look through one quarter since one quarter doesn't always make a trend. Try to get a sense for what that's doing.... I think it still gets back to market position. Oracle is in some interesting, important markets, it's a leader, it's gaining share.... We don't want to be a little player in a big market or a little market. We want to be number one or number two, hopefully number one, in a big, important, growing market. The last thing is technology change. For investors it can be hard to understand what's going on sometimes. It's hard for companies to understand. The thing is, do you have vision, do you have the leadership that's able to see change?"

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