Oracle Corp. (NYSE:ORCL)

CAPS Rating: 4 out of 5

The Company develops, manufactures, markets, distributes and services database, middleware and applications software that helps organizations manage and grow their businesses.


Player Avatar Googlespooch (20.11) Submitted: 2/28/2013 1:12:04 AM : Outperform Start Price: $33.81 ORCL Score: +0.67

Oracle holds a number of distinct competitive competencies. First of all, Oracle has an uncanny ability to continue to innovate and push new and better IT solutions products on the market. These products range from database management to hardware solutions to consulting and customer service segments as well as business applications and e-commerce technologies. In its strong diversification and continued innovation, Oracle holds a serious anchor position in the industry as it goes forward.

In addition, Oracle has been able to effectively integrate the important components of companies that it has acquired without depreciating the corporate character of Oracle itself (this is definitely something that Hewlett-Packard could stand to educate itself on from Oracle). Oracle does this by either operating acquired firms as subsidiaries with devoted permanent teams or by fully integrating the firms’ technology solutions and strategy into Oracle’s technology and strategy. This is something that is even very hard for firms with strong management skills.

In terms of resources, Oracle has a few key resources that have been very valuable to them. First and foremost amongst them has been its strong employee knowledge and ability. Without these knowledge workers, Oracle would not have been able to continue to develop its innovative products and continue to find ways to aggressively market them to new customer segments.

Another very important resource is Oracle’s cash hoard. Oracle has a huge amount of cash on hand that has allowed it to weather downturns in the industry, take significant risks, and acquire interesting competitive firms. In doing so, Oracle has been able to diversify heavily as well as mitigate competitive pressures.

Also, Oracle’s strong CEO needs to be considered a resource. Ellison is a strong figure in Oracle and he has largely piloted the company through the decades to become one of the most successful technology firms in America. Through his willingness to take risks and his foresight for the future developments in his sphere, Oracle has flourished as it has been able to adapt and change of technology.

Finally, Oracle has an extremely strong customer list. They hold the business of the top 100 Fortune firms which account for approximately $13 billion of revenue alone. Due to the high switching costs as well as Oracle’s superior products, Oracle has been able to maintain these high-value customers with relative ease.

In terms of opportunities, Oracle has a few major sources of opportunity going forward. First of all, the level of internet use in the world is only increasing and a rapid rate at that. For example, the number of users increased some 1,000% increase in ten of the top twenty internet-using countries between 2000 and 2010. In considering that Oracle is continuing to expand into internet-based technologies, it should seem apparent that this means that Oracle’s customer base is going to continue to expand as well as the importance of its business solutions.

Going along with this, Oracle acquired Sun Microsystems. In doing so, Oracle gained hardware exposure and new customer segments. As the use of the internet goes up, there are going to be even more customers investing in the types of hardware that Oracle deals in. For example, governments, universities, and new businesses will all be investing in hardware in order to access the internet. In conjunction with this, Oracle’s increasing focus on software as a service solutions has provided to provide licensing revenues as well as hardware revenues to Oracle.

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