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Financial AnalysiCompany Being Evaluated                          Competitor #1   Competitor #2  Competitor #3
Oracle (ORCL) Microsoft (MSFT) Informix (IFMX) Sybase (SYBS)
Current Period Year-ago PeriodYear-over-Year Current Period Current Period Current Period
00Q2(11/99) 99Q2(11/98) Growth 00Q1 (9/99) 99Q3 (9/99) 99Q3 (9/99)
Income Statement . . .
Sales 2,322 2,056 12.9% 5,384 216 216
Cost of Goods Sold 753 780 -3.5% 712 55 65
Net Income 384 274 40.1% 2,191 24 16
Shares Outstanding 1,503 1,475 1.9%
Balance Sheet . . .
Cash & Equivalents 2,134 1,908 11.8% 18,902 214 275
Current Assets 4,400 4,088 7.6% 21,963 428 476
Short-term Debt 3 8 -62.5% 0 0 0
Current Liabilities 2,471 2,252 9.7% 8,332 317 364
Long-term Debt 301 304 -1.0% 980 0 0

Margins & Ratios . . . Competitors'
Average
Gross Margins 67.6% 62.1% 5.5 86.8% 74.5% 69.9% 77.1%
Net Margins 16.5% 13.3% 3.2 40.7% 11.1% 7.4% 19.7%
Cash-to-Debt 7.02 6.12 14.8% 19.29 No Debt! No Debt! 19.79
Net Cash 1830.0 1596.0 14.7% 17922.0 214.0 275.0 6137.0
Fool Flow Ratio 0.92 0.97 -5.5% 0.37 0.68 0.55 0.53
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Ranking Rule Makers
1) Brand Points (0-1) 3) Financial Dire Points (0-3)
Familiarity 1 Sales Growth 2
Openness 1 Gross Margins 3
Optimism 1 Net Margins 3
Legitimacy 1 Shares Outstanding 2
Inevitability 0 Cash-to-Debt 2
Solitariness 1 Fool Flow Ratio 2
Humor 1 Expansion Potential 3
Subtotal 6 Subtotal 17
2) Financial Loca Points (0-2) 4) Monopoly Statu Points (0-4)
Mass Market Habit 1 Gross Margins 0
Gross Margins 2 Net Margins 0
Net Margins 2 Net Cash 0
Cash-to-Debt 2 Fool Flow Ratio 0
Fool Flow Ratio 2 Convenience 2
Your Interest 2 Subtotal 2
Subtotal 11
5) Your Enjoyment 1
Total Score 37 Third Tier

I was surprised to see Oracle's score drop from 40 six months ago. My initial reaction
reading the earnings report was that the financial direction was very impressive:
gross margins up 5.5 points, net margins up 3.2 points, and the flow ratio down
more than 5%. However, these numbers bounce around quite a bit from quarter to
quarter, so the improvements may just reflect a weak year-ago quarter.

More importantly from a Rule Maker perspective, Oracle falls short of its competitors in
all three measures. Granted, Microsoft is a tough comparison, but even Informix and
Sybase best Oracle in gross margins and flow ratios.

Oracle's Rule Maker score was reduced by 1 point as sales growth slowed to under 15%.
The score was further reduced by 2 points as Oracle's net margins fell behind the
competitors' average. Informix and Sybase posted better results in the September
quarter than in the March quarter, driving up the competitors' average net margin
by more than 2 points.

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I would'nt consider MSFT/IFMX/SYBS as compitetors to ORCL. Reasons:

MSFT : Oracle and Microsoft operate in different segments of the Software Market. (MSFT - Windows Monopoly and has revenues from UNIX segment totalling - zip ). Oracle's revenues mostly come from licensing databases & applications (e-commerce, CRM & ERP) in UNIX world for the enterprise customers.

IFMX & SYBS : Annual sales less than $1B. Does it not make them difficult to compare with Oracle ?

IBM and SAP or SEBL would be the best competitors to Oracle. I'll try to post an analysis of Oracle (RM) with these compitetors soon.

Cheers,
Jayanth

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I look forward to your analysis. I considered stretching my worksheet two more columns to include SAP and SEBL.

My wife and I bought Oracle because of its dominance of the database market. In other words, we felt it was a Rule Maker, although at that time, three years ago, the term Rule Maker had not yet been coined (nor had Cash King).

Now I'm a little nervous because the value of our Oracle stock has grown to be quite a bit bigger than that of our Microsoft and Cisco stock. Should we rebalance? My gut says no, that the Internet explosion will enable Oracle to rack up huge database sales. If the company can do well in applications, customer relationship management, or business-to-business e-commerce, too, so much the better. And I'd prefer to avoid taxes and commissions.

But I'm trying to assess if Oracle is somehow deficient as a Rule Maker. Albertson's was a great stock for us, too, until problems which were clearly evident in a Rule Maker analysis sank the company's shares 46% in 1999. I will be very interested in the comparison with IBM, SAP, and Seibel!
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