Can Oracle Beat IBM and Cisco Systems in the Clash of Tech Titans?

Can Oracle Beat IBM and Cisco Systems in the Clash of Tech Titans?

Oracle will release its quarterly report on Wednesday, and investors haven't been at all certain about the tech giant's prospects recently, sending shares up and down in volatile movements over the past few months. With IBM , Cisco Systems , and other tech titans fighting to take maximum advantage of favorable trends in enterprise software, cloud computing, virtualization, and data analytics, Oracle has faced more competition than ever.

Many ordinary Americans aren't all that familiar with Oracle because its software offerings tend to focus not on consumer-oriented applications but rather on businesses. Its acquisition of Sun Microsystems several years ago only heightened Oracle's grip on the business community, and the company has worked hard to develop the software-as-a-service business model to enhance its profits and create recurring streams of revenue that investors can rely on. But with incursions from IBM and Cisco added to the perennial attempts of smaller companies to rise to Oracle's stature, the question investors face is whether Oracle can keep leading the industry forward in the direction of its choosing. Let's take an early look at what's been happening with Oracle over the past quarter and what we're likely to see in its report.

Stats on Oracle

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$9.18 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Oracle earnings climb faster?
In recent months, analysts have had mixed views on Oracle earnings. They've cut their November-quarter estimates by $0.02 per share, but boosted their full-year fiscal 2014 projections by the same amount. The stock hasn't done much lately, rising less than 2% since mid-September.

Oracle has faced challenges in getting customers to spend money on information-technology expenses, and that showed up in its August-quarter results. Even though Oracle managed to boost net income by 8% on a 2% rise in revenue, the company fell short of sales levels that investors had expected. In addition, guidance from Oracle toward revenue growth of just 1% to 4% for the November quarter and weaker earnings than most had projected caused some investors to worry about Oracle's future.

As much attention as IBM and Cisco have gotten, Oracle faces big challenges from smaller players. For instance, Workday and established a partnership in order to combine their respective management-software strengths in the hopes of providing lower-cost solutions to cost-conscious enterprise customers. Those efforts continue despite the fact that Salesforce has its own partnership with Oracle to encourage joint use of their offerings. Meanwhile, Splunk has challenged both IBM and Oracle in the data-analytics space, marking the trend toward nimble small competitors able to react more quickly and efficiently to rapid changes in the tech industry than large monolithic companies like Oracle.

Oracle's challenges aren't unique, as Cisco Systems and IBM have both faced many of the same issues. Cisco in particular has suffered from dire warnings from CEO John Chambers, who has repeatedly discussed the potential for weaker results than investors had hoped to see. In Oracle's case, on the other hand, CEO Larry Ellison has raised controversy due to his high pay and his absence from last quarter's earnings call due to Oracle's entry in the America's Cup yacht race.

In the Oracle earnings report, watch to see how Ellison responds to criticism, and more importantly how the company will work harder to differentiate itself from Cisco and IBM as they all compete for the same business. Either way, investors need to expect a cutthroat battle among tech's titans in 2014 and beyond.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Cisco Systems and The Motley Fool owns shares of International Business Machines and Oracle.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published