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Oracle a ‘Hold,’ Still Needs to Grow: Analyst
19 Mar 2012 EDT - CNBC.com

Oracleis due to release third-quarter earnings Tuesday after suffering its worst quarter in nine years in the previous quarter. Despite this, shares of the world’s biggest maker of database software are holding at near $30 so far this month.

RBC Capital’s Robert Breza told CNBC the stock is still a “hold,” even though Oracle is in need of growth. Breza said its acquisition of Taleo , as well as recent release of its Fusion applications are steps in the right direction.

“Oracle’s starting to accelerate their investments” in software and service, Breza said.

Oracle blames its November tumble on a weak economy, which caused prospective buyers to delay their purchases. It also faces competition from long-time rival SAP and newcomers Salesforce.comand privarely held Workday.

One large stumbling block for Oracle is that it has lost key partners in business when it began producing hardware as well as software. International Business Machines and Hewlett-Packard, which once would promote Oracle’s software products, are now competitors.

The company’s relationship with HP was further damaged when Oracle hired its CEO, Mark Hurd, after he left following allegations of sexual harassment. Hurd resigned following an investigation that found “no violation of HP’s sexual harassment policy, but did find violations of HP’s Standards of Business Conduct,” according to the company.

The companies filed lawsuits against each other after Oracle decided to stop making software for some HP computers. Losing these partners will be a major issue for Oracle.

Breza said it was “a little surprising” Oracle shares have performed relatively well, despite the last difficult quarter and the stock dropping to $25 during December before rising to $29 when it released its last quarterly earnings. He isn’t surprised, however, that there has been “a rotation out of Oracle and into other software names,” when, for example, Microsoft was up 72 percent in the same period.

Additional News: It’s a Critical Time for PC Companies: Analyst

Additional Views:Analysts Worry That Something’s Amiss at Oracle

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    Disclosures:

    A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other than investment banking services from ORCL in the past 12 months.

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