Saturday, March 23, 2013

Investopedia: Oracle's Negative Surprise Underlines A Surprisingly Volatile Model

Software giant Oracle (Nasdaq:ORCL) has always marched to the beat of its own drummer, and that willingness to go its own way has always been a big driver of the company's success. It doesn't come without a cost, though, as Oracle is also surprisingly volatile on a quarter-to-quarter basis when compared to other large tech companies like IBM (NYSE:IBM), Microsoft (Nasdaq:MSFT), and SAP (NYSE:SAP).

For the company's fiscal third quarter, that volatility swung in a very negative direction. While the shortfall may well have been due to a combination of revenue pulled forward into the surprisingly strong fiscal second quarter (as customers finished spending on 2012 budgets) and weak sales execution, investors are likely to take it as a referendum on the near-term health of the tech sector. More patient investors, though, may want to use an opportunity like this to build a position in a company that, while erratic, is also a strong performer with an interesting valuation.

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