Oracle Likely to Bend to Recessionary Winds

Oracle's boom time is not likely to continue as the U.S. recession deepens. The business software giant may not be ready to put jobs on the chopping block, but it will probably curtail expenses sharply.

Business software maker Oracle (Nasdaq: ORCL) is scheduled to report its fiscal second-quarter results after the stock market closes Thursday.

The following is a summary of key developments and analyst opinion related to the period.

Overview: Oracle has been on a roll for several years as it snapped up dozens of its smaller rivals, but the Redwood Shores-based company will be hard pressed to keep the momentum going as more corporate customers curtail their spending on technology to weather the recession.

Analysts already have lowered their fiscal second-quarter estimates to below the target set by Oracle's management three months ago and are bracing for a cautious outlook for the rest of the fiscal year ending in May.

The big question now is whether Oracle will rein in its expenses to help offset the anticipated weakness in its sales. Many other technology companies already have drawn up plans to prune their payrolls, so it won't be a shock if Oracle trims its payroll of about 85,000 employees worldwide.

Most analysts, though, seem to think Oracle will start off by curbing travel expenses and other discretionary items before resorting to its first mass layoffs since the dot-com bust of 2001 shriveled its software sales.

Oracle eliminated about 2,300 jobs between May 2001 and May 2003, representing a 5 percent reduction from a much smaller work force at that time. If Oracle were to impose layoffs on a similar scale in this recession, it would translate into about 4,300 fewer jobs.

As usual, investors are likely to focus on Oracle's sales of new software licenses -- a key benchmark because those deals uncork a stream of future revenue from product maintenance and upgrades.

Back in September, Oracle forecast its new software sales during the second quarter would rise by 2 percent to 12 percent. Some analysts think Oracle may have landed a large software deal that may have helped the company fall within that range, but management isn't expected to be as optimistic in its forecast for the current quarter ending in February

By the Numbers: Analysts, on average, expect Oracle to report earnings of 34 US cents per share on revenue of $5.86 billion. The earnings estimates exclude expenses for employee stock compensation and acquisitions. Oracle's management projected adjusted earnings of 35 cents or 36 cents per share.

Analyst Take: Even though analysts have already lowered their forecasts, Brad Reback of Oppenehimer & Co. is advising investors to be prepared for a letdown when the results and third-quarter outlook are released.

"It is difficult to envision a scenario where the company's ability to close deals in late November was not negatively impacted" by the deepening recession, Reback wrote in a recent note to clients.

Stronger Dollar Doesn't Help
As if the economy isn't challenging enough, the strengthening dollar also is taking a toll on Oracle's international sales. Noting that the dollar has gained 12 percent against the euro since mid-September, analyst David Hilal of Friedman, Billings, Ramsey & Co. thinks Oracle will lose about $300 million more in revenue from adverse currency fluctuations than management anticipated in September.

Both Reback and Hilal expect Oracle to cut its costs to cope with the downturn.

Reback believes Oracle has enough wiggle room to lower its annual expenses by about $700 million without resorting to layoffs. This assumption is based on projected fiscal 2009 expenses of nearly $14 billion, or about $160,000 per employee. Oracle's expenses have averaged about $153,000 per employee during the past 12 years, Reback said.

What's Ahead: Oracle Chief Executive Larry Ellison has indicated that he may try to take advantage of the recession's fallout to buy even more rivals at bargain prices. The company already has spent more than $35 billion on takeovers completed during the past four years.

Stock Performance: Oracle shares dropped by 27 percent during its fiscal second quarter and are down by about the same amount for the year.

Source: www.ecommercetimes.com

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Minnesota Goes Live On Oracle PeopleSoft 9.0, Thanks To Infocrossing

PeopleSoft 9.0 keeps the State of Minnesota's information up-to-date with ever increasing security policies. Infocrossing, a Wipro company, has completed an Oracle PeopleSoft 9.0 upgrade at the Department of Finance and Employee Relations for the State of Minnesota. The State of Minnesota leveraged Infocrossing's enterprise resource planning and consulting expertise to upgrade from PeopleSoft 8.3 to 9.0 meeting all project criteria in 11 months as planned. The newly implemented HCM system allows the State of Minnesota to effectively manage information of non-employees and the new compliance requirements.

The department has been recently renamed to Minnesota Management & Budget (MMB). MMB provides payroll and employee benefits services to approximately 50,000 state employees and retirees, with health coverage for approximately 115,000 lives.

The upgrade has improved printing through the use of newer technologies such as XML and has set a baseline to enable other reporting capabilities. In terms of security, People Soft 9.0 keeps the State's information up-to-date with ever increasing security policies. The upgrade has thus resulted in 'best practices' and has enhanced features for vendor releases of tax upgrades, corrections and enhancements, the company claimed.

According to Scott Antin, regional vice president, sales, Infocrossing, "The State of Minnesota has been a leader in adapting new technologies and automating payroll, and we are pleased that through this implementation they will derive the benefits of an updated ERP system that can streamline business processes, reduce costs and increase employee satisfaction."

"This upgrade is a great example of how a project should be conducted and delivered. Projects of this size and complexity are often late and over budget, but MMB has had a great history of success in delivering successful projects by complete planning, establishing disciplined project management and selecting experienced partners. For this upgrade, we selected Infocrossing and its consultants brought specific business and technical product knowledge that enabled a successful conclusion," said Steve Jorgenson, CIO, MMB.

Source: www.efytimes.com

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BMW Oracle take plans for 'illegitimate' America's Cup format to court

The US team BMW Oracle will refuse to register for the next America's Cup and will instead rely on a legal appeal against the plans of the defending champions, Alinghi, to alter the event's format.

The decision means the bitter dispute surrounding sailing's most high-profile competition, held since 1851, will continue in court.

Alinghi, along with 11 other teams, have agreed to work on organising the 33rd America's Cup and had set a deadline of December 15 for the BMW Oracle team to sign on. But the BMW Oracle's Golden Gate Yacht Club, which argue that the new format unfairly favours the Swiss champions, said they had no intention of doing so as they did not consider the event to be "a legitimate America's Cup".

"Rather, we will now focus our efforts and attention on winning our appeal before the New York state court of appeals," the club's commodore, Marcus Young, said in a letter to the Societe Nautique de Geneve, which represents Alinghi. "It's clearly the only avenue left open to create a fair and competitive challenge that preserves the integrity, prestige and tradition of yacht racing's pinnacle event."

In response, Alinghi said the BMW Oracle team were pursuing a "selfish legal strategy". "While it's disappointing that BMW Oracle have chosen to proceed with the legal route instead of joining the collective process, SNG and Alinghi are committed to working with all these entered teams to organise a multi-challenge event while waiting for the final ruling from the court of appeals."

The 33rd running of the race was originally scheduled for 2009 in Valencia but was put on hold after BMW Oracle challenged the legality of the Spanish team recognised by Alinghi as the event's official challenger of record.

The challenger of record is usually involved, along with the holders, in setting up the rules for the next edition of the race.

A New York judge ruled in BWM Oracle's favour in November 2007 and a subsequent ruling set up a best-of-three, head-to-head series between the two rivals rather than the traditional multi-boat competition.

Alinghi successfully appealed against the decision, saying they preferred a later race date, a separate challenger of record and a larger field of challengers.

BMW Oracle, who object to a number of elements of the rules and structure of the planned event, filed their own appeal and the case is set to be heard on February 10 with a ruling due by the end of March.

Source: www.guardian.co.uk

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