ORCL Reports FY Q3 Earnings after the Bell Mar 24-If Long Consider Stock Replacement Strategies

by Dan March 18, 2011 2:28 pm • Commentary

ORCL ($30.90) reports earnings Mar 24th after the close and i have to think that this will be a closely watched report as investors will want to get a sense for IT demand since the disasters that were CSCO and HPQ last month.
-The implied move in the options market is ~4.5% vs the avg move over the last 4 qtrs of ~4%.

-stock down small on the year after having a an almost 30% surge in 2010…..given the volatility in the market in the last couple weeks the stock in my opinion is fairing pretty well.
-street remains fairly bullish with 35 buys, 10 holds and only 1 sell.

MY VIEW: without having too strong of an opinion on the near-term fundamentals i would say after doing a little work on the name that the Qtr is likely to be fine, but the guidance will likely be what drives the stock.  As for guidance, and i don’t want readers to take this the wrong way, but i would expect many companies reporting near term to use the disaster in Japan as a sort of “mulligan” as it relates tot heir visibility.
-As referenced above, the guidance, or lack there of, by ORCL’s  multi-national large cap tech peers HPQ & CSCO should cause holders of names such as ORCL to proceed with caution in this uncertain and volatile time…..
–Additionally, ORCL is a serial acquirer of companies and has had 1 large cap acquisition in 5 of the last 6 Q1s dating back to Jan 2005…..will there be another one soon???

SUNW-$7.4b Jan 2010,

BEAS-$8.5b Jan 2008,

HYSL- $3.3B Mar 2007

SEBL-$5.85b Jan 2006

PSFT -$10,3b- Jan 2005

If You Are Long Consider Stock replacement strategies: (Please create a Free 1 Month Trial account to read)
TRADE: Buy the APR 31 / 33 Call Spread for .70
-Buy 1 Apr 31 call for 1.00 and
-Sell 1 Apr 33 call at .30

Break-Even on Apr Exp:
Upside: btw 31.70 and 33 can make up to 1.30, and above 33 you make 1.30 or almost 2x your money….
Downside: stock btw 31 and 31.70 u lose up to .70, below 31 lose all .70 premium u paid……