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Yeah, I've been scratching my head, too. Oracle's P/E ratio implies the expectation of great growth, but to me Oracle looks kind of floundering with competition

Yeah, I've been scratching my head, too. Oracle's P/E ratio implies the expectation of great growth, but to me Oracle looks kind of floundering with competition from F/OSS databases and all the failed acquisitions / new lines of business such as "cloud". I would short Oracle if the overvaluation wasn't so old and stable. Hard to guess if or when it will end.

chollida1 8y ago
> Oracle's P/E ratio implies the expectation of great growth, but to me Oracle looks kind of floundering with competition from F/OSS databases and all the failed acquisitions / new lines of business such as "cloud". Umm, ORCL's PE is currently 18.7 and the average PE of the S&P 500 is currently around 21 so your statement about a PE that is pricing in "great growth" is dubious at best:). The average S&P 500 PE ratio is also above 18 if you start at a reasonable date of say 1980.. http://www.multpl.com/ http://www.multpl.com/
- ahartmetz 8y ago
  Yeah, looks like I misremembered the degree of overvaluation. That said, you have to compare it to valuations of dividend stocks (~15 - Apple, uh... OK, difficult. McD's, Procter & Gamble 25?!, Ford 10...) and growth stocks (~25 - Google, Microsoft, Facebook). Oracle is more of a shrinkage stock IMO...
dehrmann 8y ago
F/OSS dbs AND hosted versions of those. It used to be that if you wanted to mitigate career risk, you buy Oracle so if the DB has issues, you bought the best. If Mysql fails, you were cheap. Now you can play the AWS card. If Aurora fails, you picked a hosted DB from a known vendor. And adding to your point, F/OSS DBs have gotten really good, and they're commoditized.
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basch 8y ago
Are you really looking at their acquisitions? They own an SD-WAN company, NetSuite, a massive construction software business (Textura, Aconex, etc), a pretty massive marketing cloud to compete with Adobe and Salesforce. I think people who are calling Oracle just a database company are really underselling how much value they sell above the database abstraction, they are much closer to Microsoft and AWS (and SAP, Adobe, Autodesk) than people think. They own and sell a ton of cloud "services" that arent "database" but instead specific tasks. Their "divisions" are Servers, Storage, and Networking; Middleware; Industry Solutions including Communications and Media, Construction and Engineering, Health Sciences, Hospitality and Retail, Utilities; and Applications. They tend to focus on more specific purpose software, compared to Microsoft and Adobe more general purpose software for all industries.
- guitarbill 8y ago
  It doesn't matter how many things they do if they do them all badly, and can't figure out a coherent strategy. See also IBM.
  - basch 8y ago
    They dont necessarily need an overall strategy between some of these units. What is the chance a Talari and Aconex integration is useful? They act more like a holding company or vc, who owns a bunch of individual businesses. Nobody criticizes Berkshire Hathaway for not integrating its different businesses together.

chollida1 8y ago

> Oracle's P/E ratio implies the expectation of great growth, but to me Oracle looks kind of floundering with competition from F/OSS databases and all the failed acquisitions / new lines of business such as "cloud". Umm, ORCL's PE is currently 18.7 and the average PE of the S&P 500 is currently around 21 so your statement about a PE that is pricing in "great growth" is dubious at best:). The average S&P 500 PE ratio is also above 18 if you start at a reasonable date of say 1980.. http://www.multpl.com/ http://www.multpl.com/

ahartmetz 8y ago
Yeah, looks like I misremembered the degree of overvaluation. That said, you have to compare it to valuations of dividend stocks (~15 - Apple, uh... OK, difficult. McD's, Procter & Gamble 25?!, Ford 10...) and growth stocks (~25 - Google, Microsoft, Facebook). Oracle is more of a shrinkage stock IMO...

dehrmann 8y ago

F/OSS dbs AND hosted versions of those. It used to be that if you wanted to mitigate career risk, you buy Oracle so if the DB has issues, you bought the best. If Mysql fails, you were cheap. Now you can play the AWS card. If Aurora fails, you picked a hosted DB from a known vendor. And adding to your point, F/OSS DBs have gotten really good, and they're commoditized.

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basch 8y ago

Are you really looking at their acquisitions? They own an SD-WAN company, NetSuite, a massive construction software business (Textura, Aconex, etc), a pretty massive marketing cloud to compete with Adobe and Salesforce. I think people who are calling Oracle just a database company are really underselling how much value they sell above the database abstraction, they are much closer to Microsoft and AWS (and SAP, Adobe, Autodesk) than people think. They own and sell a ton of cloud "services" that arent "database" but instead specific tasks. Their "divisions" are Servers, Storage, and Networking; Middleware; Industry Solutions including Communications and Media, Construction and Engineering, Health Sciences, Hospitality and Retail, Utilities; and Applications. They tend to focus on more specific purpose software, compared to Microsoft and Adobe more general purpose software for all industries.

guitarbill 8y ago
It doesn't matter how many things they do if they do them all badly, and can't figure out a coherent strategy. See also IBM.
- basch 8y ago
  They dont necessarily need an overall strategy between some of these units. What is the chance a Talari and Aconex integration is useful? They act more like a holding company or vc, who owns a bunch of individual businesses. Nobody criticizes Berkshire Hathaway for not integrating its different businesses together.