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I am thinking about buying ORCL shares but I wanted to get a rough idea of the valuation of the apps part of Oracle's business.

Before all this happened Oracle was trading at $20. Now I presume part of the rise was due to an increase of Oracle databases for Internet servers – so I'll say, arbitrarily, then it would be worth a $10 rise. The current price is $80 so that leaves $50 dollars for the Applications market.

From Yahoo the market cap is $225 Billion ( I presume that this isn't fully diluted - but it will do for the sake of this example).

So the rise in the share price is equivalent to

50 / 80 * 225 = $140 billion.


They returned $447 million dollars from Applications ( 61% increase for the quarter) - if I say that they'll manage a 30% for the next 4Q ( I don't know if there is any management guide lines for this ) then I get a P/S ( where s = license sales) of
( With a 30% increase per Q we get 581 , 755 , 982, 1276 = 3.5 billion)

So the P/S is 140 / 3.5 = 40

Is this along the right lines?
Would it be fair for me to compare this with other companies in the applications space?

------------------------------------------------

Also,

Comparison of Oracle V Siebel for the last 5 CRM License revenue

............6/99....9/99....12/99....2/00.....6/00
Oracle.......44......31......49.......49......113

............6/99....9/99....12/99....3/00.....7/00
Siebel......110......126.....170.....190.......???


If we are to believe those figures and if this is no fluke, and we have no reason to suppose, then Siebel will not be a gorilla in 2 quarters time.


Supply Chain.

ITWO License fees for the last q - $113 million.
ORCL “ “ “ “ “ “ - $26 million

I'm not worrying yet ( but then I said that about CRM :) ).

Do we agree that providing Oracle keeps this pace then Siebel will no longer be a Gorilla or do we think that Oracle has been to liberal as what counts towards CRM?

(I know that Oracle has tendered to have a good 4th quarter and a weak 1st and 2nd but if Larry is believed this will no longer happen.)



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