Oracle to report earns as tech spending hums along

Oracle Corp. is scheduled to report its fiscal third quarter results after the market closes on Thursday.
WHAT TO WATCH FOR: Information technology spending is humming again, and Oracle is at the center of some of the most lucrative trends.
Wall Street uses Oracle's results to gauge businesses' appetite for new software. And now that Oracle owns Sun Microsystems, investors are also using Oracle to measure the demand for computer servers.
Investors will be monitoring Oracle's latest numbers for clues about the strength of those markets. And because Oracle's fiscal third quarter includes the months of January and February, the results offer insight into key weeks that many other technology companies haven't reported.
WHY IT MATTERS: Oracle's database software underpins everyday transactions, from bank withdrawls to airline reservations. The technology has made Oracle's CEO, Larry Ellison, one of the world's richest men.
The company is now a major player in computer hardware as well, having bought Sun Microsytems, a big server maker, for $7.3 billion in a deal that was completed last January after heavy regulatory scrutiny. The acquisition shook up the information technology industry. Oracle is now a more full-fledged competitor against IBM Corp. and Hewlett-Packard Co.
The companies compete fiercely for the biggest contracts to outfit corporate and government data centers.
In absorbing Sun, Oracle has needed to turn around a deeply wounded Silicon Valley institution. But many analysts say there's a big upside.
Analyst Yun Kim with Gleacher and Co. said the Sun acquisition is "viewed by most in the financial community as a successful acquisition." Kim added that Oracle's hiring of Mark Hurd as a co-president — he was ousted last August as HP's CEO in a sexual harassment scandal that didn't turn up evidence of harassment — could help Oracle if it's on the hunt for another large acquisition. One possibility could be computer networking, an area of HP that Hurd was strengthening.
Patrick Walravens, an analyst with JMP Securities, said he expects a strong quarter from Oracle and that Hurd has helped boost Oracle's sales force productivity. In reference to the earthquake and tsunami disaster in Japan, Walravens said that Oracle only derives a small percentage of its revenue from Japan and isn't as exposed to the country financially as some other software companies, such as Adobe Systems Inc. and Salesforce.com
WHAT'S EXPECTED: Analysts polled by FactSet expect Oracle to earn 50 cents per share, excluding items, on $8.66 billion in revenue.
An important figure for Oracle is always its revenue from new software licenses. Oracle has predicted a rise of 10 percent to 20 percent over the prior year, which translates to a range of $1.89 billion to $2.06 billion.
LAST YEAR'S QUARTER: In the same period last year, in which Oracle had only owned Sun Microsystems for one month, Oracle earned 38 cents per share, excluding items, on $6.40 billion in revenue.
That quarter is typically strong as Oracle's sales force seeks to close deals before the end of the year.