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Take Profits on Oracle Corporation (ORCL) Stock Before Q3 Earnings

ORCL stock has rallied nicely to start 2017, but it might be time to bow out

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Oracle Corporation (NYSE:ORCL) has made a nice move to the upside so far in 2017, with ORCL stock up 10% to beat the broader market.

Oracle Corporation (ORCL) Q3 Earnings Preview
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Then again, that doesn’t make Oracle stand out too much. Many mega techs — Microsoft Corporation (NASDAQ:MSFT), SAP SE (ADR) (NYSE:SAP) and Cisco Systems, Inc. (NASDAQ:CSCO) — have logged similar gains.

So, does Oracle have anything special in the chamber?

Well, we should get a better idea on Wednesday, March 15, after the bell when Oracle earnings for the third quarter come out into the light.

Oracle Earnings Preview

Wall Street expects Oracle to report revenue growth of 2.8% to $9.26 billion for its fiscal third quarter. Meanwhile, ORCL earnings should fall from 64 cents to 62 cents.

Though how much those expectations matter is up in the air, considering Oracle has missed top-line expectations in eight of the past 10 quarters.

Oracle has been making a big push toward the cloud, though it’s certainly late to the game. Cloud computing has been around since the late 1990s, and much of the growth has left Oracle behind. Instead, it has been snapped up by the likes of, Inc. (NYSE:CRM).

Interestingly enough, the risk to ORCL stock is not necessarily the technology required, but the change in the core business model. Oracle is switching from upfront licensing fees — which can be hefty and cost-prohibitive to many companies — to lower subscription payments. It’s a transition that can be successful, but can also take time, as Adobe Systems Incorporated (NASDAQ:ADBE) can attest.

The good news for Oracle is that the company is getting traction with its cloud efforts. From its previous quarter:

  • Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $878 million, up a sizzling 81%.
  • Total Cloud Revenues, including infrastructure as a service (IaaS), were $1.1 billion, up 62%.
  • ORCL is No. 1 in SaaS cloud applications sales to customers with over 1,000 employee, based on a report from IDC.
  • Oh, and with the $9.3 billion acquisition of NetSuite, ORCL should become the No. 1 cloud applications service provider for companies with less than 1,000 employees.

It’s important to note that ORCL has many strong assets to leverage, too.

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