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					Investment Rating
No Buy
                               Oracle Corporation (ORCL)
Pricing                        I. Investment Highlights
Closing Price         $12.68
52 Week High          $14.87   Company Profile
52 Week Low           $11.25
                               Oracle Corporation was founded in 1977 when still CEO
                               Larry Ellison saw an opportunity to use a previously
Valuation
                               overlooked prototype for relational business database
FY (Dec) Dil. EPS P/E
2004      $0.50 22.80          software. Mr. Ellison and his two partners soon changed
2005      $0.55 23.27          the way businesses used their data, and became one of
                               the first companies to offer its product over the internet.
                               Today, Oracle engages in all stages of the software
Profitability &                industry from development to servicing and consulting.
Effectiveness (ttm)            Oracle offers three types of software: database,
ROA               17.07%       application, and middleware. Database software is used
ROE               29.94%       for developing and using applications related to a
Profit Margin     23.45%       companies database. Middleware is used for deploying
Operating Margin 35.69%        applications on the internet and companies intranets.
                               Middleware links different software and allows various
Market Data
Total Assets (000) 24,058      systems to communicate with one another. Application
Volume (000) 41,947,882        software is used to enhance and automate business
Market Cap (Bil) 64.91B        functions, and integrate all facets of the company into
Avg. Vol (000) 38,870,000      one system that can be accessed by all users. Oracle
EPS (ttm)            0.55      offers other services such as consulting, which the firm
P/E (ttm)           22.73      directs others in the implementation process, along with
Div & Yield          N/A       possibly customizing software to fit the customer.
ttm- last 12 months
*-last 3 months                Oracle offers product licensing and upgrades that include
                               support and education on the software use. Oracle’s
Michael Behrens                customer base is worldwide. Oracle markets their
Mcbb73@mizzou.edu              products on their own in the United States, and through
                               their international partner network overseas. Recently
                               the company has had to weather a series of legal
                               proceedings, including one charge against CEO Larry
                               Ellison on charges of insider trading. Oracle
                               Corporation is based in Redwood Shores, California.
                               Oracle has approximately 50,000 employees worldwide,
                               and
Growth Dynamics

Revenues for Oracle in the first quarter of the 2006 fiscal year were $2.8, a rise of 25%
from the same three month period the previous year. Analysts estimate second quarter
revenues to be $3.42 billion, which would also be an increase from the previous year’s
revenues for the second quarter of $2.76 billion. Revenues for the 2005 fiscal year rose
25% from 2004, and only 8% from 2003 to 2004.

Oracle has followed an aggressive growth through acquisitions strategy in the past few
months, in hopes of becoming the world’s largest software company. Oracle is currently
second behind SAP. This strategy led Oracle to acquire or merge with eleven companies
already in 2005. With these acquisitions, Oracle has extended its product line, and hopes
to offer a complete one stop shopping line for commercial software.

When Oracle acquires a company, they hope to acquire their customers and their
technology. The technology that Oracle Chief Executive Larry Ellison sees as the future
for Oracle is middleware. Oracle has acquired some middleware technology through
acquisitions, but is also developing its own software in what they call project fusion.
Oracle’s vice president of technology stated that when Oracle entered into the
middleware market in 2001, the value of the business segment was zero. He also said
that Oracle had grown the segment 22% per year for the past four years running, while
competitors such as SAP had their middleware segments flatten out or decline.

Overseas growth is also in the playbook for Oracle, with China and India being the
markets at the top of their list. Oracle’s president stated that they have a two pronged
approach to overseas growth, which will begin with investment in new research centers.
Oracle hopes to open offices in thirty to forty new cities in the next few years. Oracle
also plans to open new research facilities in mainland China, and to aggressively pursue
growth especially in mainland China by increasing its partnership network there.


II. Executive Summary

Oracle Corporation develops, manufactures, markets, and services advanced software
solutions for all different types of industries from manufacturing to service. Oracle is
presently engaged in three main types of software: application software, database
software, and middleware. Application software is used for automating all facets of a
business into one system, and allowing for the efficient and timely processing of orders,
cash flows, and materials. Database software is used to develop and apply different
applications to process and use information that is collected in a company’s database.
Middleware is used to connect different systems and allow them to communicate with
one another. This helps a company apply functions over the internet or their internal
intranets. Oracle is coming off of a year filled with strategic acquisitions, which are part
of their overall plan to become a one stop shopping platform for all of a companies
commercial software needs. In addition to this, Oracle feels that middleware will be the
next big thing in software, and thus have created project fusion to further develop their
line of middleware to go along with the products they gained through their strategic
acquisitions.

Investment Recommendation: Not Buy

Intel is based on the core strengths of Manufacturing and Technology,
architecture/platforms, worldwide ecosystem, global presence brand and corporate
excellence. From these strengths, Intel derives their competitive advantages as volume
economics, great products with differentiated features, unparalleled industry
commitment, global reach and brand strength, and 18 Years of Profitability. These
competitive advantages result in growth through platforms.

Pros:
       Largest application software company in the world
       Large product line on their Oracle on Demand line
       Aggressive growth through acquisition strategy in the past year
       Excellent opportunity for growth in emerging markets
       Middleware showing to have potential for growth in the short term

Cons:
       Software industry slowing down
       Acquisition strategy may not be as profitable as planned
       Integration problems may reduce profitability
       Has underperformed the market recently

Oracle has a positive outlook for the short term; however it is very uncertain how things
will pan out. The Acquisition of Siebel has been hampered by the courts, just as their
hostile takeover of PeopleSoft was earlier this year. CEO Larry Ellison also had charges
brought against him for insider trading, and the company was ordered to pay over $20
million in fines for those charges. Despite these setbacks, Oracle hopes that the
middleware segment will take off in the next few months, and they hope to increase their
presence overseas, especially in mainland China. While these prospects are appealing, I
feel that waiting to see how the acquisition pans out would be prudent.

III. Company Description (www.oracle.com)

Oracle develops, manufactures, markets, and distributes application, database, and
middleware software to all types of commercial organizations. Oracle was founded in
1977 by Larry Ellison and two co-founders, Bob Miner and Ed Oates. The company is
headquartered in Redwood Shores, California and has over 40,000 employees worldwide.
Leadership

Larry Ellison is the first and only CEO in the almost thirty year history of the Oracle
Corporation. Mr. Ellison founded the company in 1977 along with two co-founders, and
took the leadership role from the beginning. Mr. Ellison is also on the board of directors,
which he was chairman of until 2004. He has been a board member since 1985. Along
with Larry Ellison, oracle also has three presidents who are also board members. Safra
Catz is president and also a member of the board since 2001. Charles Phillips is
president of global field operations and has been a member of the board since 2004.
Gregory Maffei has been president and CFO since July 2005 and is also a member of the
board of directors.

Since Larry Ellison founded the company in 1977 he has been dedicated to a strategy of
increasing technology and innovation at Oracle. Oracle was one of the first companies to
offer products on the internet, and was the first company to develop and deploy one
hundred percent internet enabled software across its entire product line. While the
company was founded on the intent of providing relational database software, the
company goal has now shifted to providing a comprehensive software solution to its
customers.

Mr. Ellison has recently acquired a reputation of being somewhat of a bad boy of the tech
industry. While the tech industry has been characterized by calculated acquisitions and
layoffs, Larry Ellison has been recognized by both Business Week and the San Francisco
Chronicle of being notoriously cold and unforgiving in his takeover strategies. This was
brought out in the opposition of the employees of PeopleSoft during Oracles hostile
takeover of the company. The San Francisco Chronicle reported that while many people
may have given up on the takeover after attempts by both Congress and PeopleSoft to
halt the deal, Mr. Ellison stayed focused and managed to get the deal completed and the
company integrated better than analysts expected.

IV. Economic and Industry Environment

The Software industry has recently begun a trend of consolidation. Oracle has been a
leader of this type of growth with eleven mergers and acquisitions already in the 2005
calendar year. With the recent economic trends, customers have been spending less on
overall computer systems, so competition has grown to compete for fewer contracts.

An article from the Business and Company Resource Center stated that the software
industry consists of application software and database software. The major players in this
industry all started out specializing in a subcategory of one of these segments, and later
branched out to encompass all types of enterprise software. Recently the IT industry has
slowed down and led to the trend of consolidation, which has forced the large companies
to extend their product lines either through development, or in most cases through
mergers and acquisitions.
Western companies, particularly those from Silicon Valley, have typically dominated this
industry. These companies have demonstrated the ability to raise more capital and
provide more service than most of their international competitors. This is demonstrated
by the fact that the top three companies in the world are the same in order as the top three
in the United States and Europe.

The total value of the software industry reached nearly $130 billion in 2003. The
industry grew on average of five percent per year from 1999 to 2003. This growth was
mainly due to international expansion, with the Asia Pacific region accounting for the
largest portion of the growth. The United States is still the leader in terms of generated
revenues, with just over fifty percent of revenues coming from the United States, Europe
came in second with close to twenty five percent. Analysts expect this growth to slow
slightly in the years up to 2008. This is mostly due to the slowdown in the IT industry,
which has been the reason the large software companies emerged. In terms of regional
growth, the United States is expected to remain the same, with Europe expected to
decline slightly and the Asia Pacific region expected to grow even more with the
increased speed of China’s development.

On average, the semiconductor industry has enjoyed a growth rate of 17 percent per
annum since 1959. In 1990 global sales hit a then-record US$50.5 billion. Five years
later, sales had tripled to US$144.4 billion, and in 2000 sales reached US$204.0 billion.
By 2003, after the sharp economic downturn in the early years of the decade, global sales
were back up to US$166.0 billion and growing, of which US$80.0 billion was from the
United States. Most analysts anticipated a swift and substantial upswing, since the rapid
expansion of the telecommunications industry is creating more demand for
semiconductors, which are used in devices for networking and wireless communications,
in addition to the rapid increase in the use of digital technologies. The world's appetite for
electronic devices assured that robust growth would continue to characterize the industry.


   Revenue Estimates        Current Qtr        Next Qtr    Current Year         Next Year
 Avg. Estimate              3.42B         3.51B           14.21B           15.55B
 No. of Analysts            29            29              30               27
 Low Estimate               3.30B         3.35B           13.83B           14.52B
 High Estimate              3.53B         3.70B           14.69B           16.82B
 Year Ago Sales             2.76B         3.09B           N/A              14.21B
 Sales Growth (year/est)    24.1%         13.4%           N/A              9.4%

Source: finance.yahoo.com

Competition (Business and Company Resource Center, MU Libraries Database)

The software industry has become more competitive in the past few years with the
consolidation of the industry that was spurred by the overall slowdown of the previously
hot IT industry. From this consolidation grew several very large software companies.
For the most part the United States has been the leader in the software industry with
companies coming out of Silicon Valley leading the way. Europe is growing in the
software industry with SAP growing to the position of fourth largest software company in
the world.

Oracle Corporation

Oracle Corporation is the largest application software company in the world, and the
second largest independent software company in the world, trailing only Microsoft in that
category. Founded in 1977 in Redwood Shores, California, Oracle began as a relational
database software specialist. As revenues grew throughout the 1980s and 1990s, Oracle
continued to expand its product line to include both application software and middleware
as well. In the late 1990s Oracle took advantage of the hot IT field where large
companies were purchasing ERP systems and database systems to replace outdated and
inefficient systems, or the lack of any system that the large companies had. In recent
years with the bursting of the tech bubble, Oracle has had to switch its growth strategy to
one of mergers and acquisitions. With this strategy Oracle hopes to become an overall
commercial software solution company.

Microsoft Corporation

Microsoft is the largest software company in the world with revenues of nearly $40
billion per year. Microsoft offers a wide range of software products from high end
comprehensive commercial systems, to small programs used in consumer PCs and
notebooks. Headquartered in Redmond, Washington, Microsoft has subsidiary
companies in over sixty countries worldwide. While Microsoft has experienced enormous
success over the course of their history, recently they have encountered problems in the
form of regulatory infringements and court rulings against them in putting them in
violation of the Clayton Act. Microsoft has experienced growth of around 14% in the
past two years.


IBM Corporation

IBM (International Business Machines) is a global IT company. They are divided up into
five divisions: Global Services, Hardware segment, Software segment, Global Financing
and Enterprise Investments. These divisions operate in over 160 countries worldwide.
IBM recorded revenues in 2003 of nearly $90 billion, which was a ten percent growth
over the previous year. While previously in the PC manufacturing business, IBM has
recently shifted its focus to consulting. They now provide not only IT consulting, but
they use their experience to provide overall business consulting.


SAP AG

SAP is an enterprise software company headquartered in Walldorf, Germany. Their
MySAP product suite directly competes with the Oracle on Demand suite, both of which
provide comprehensive business applications. Along with application software, SAP also
provides supply chain software and consulting and servicing. In 2004 SAP recorded
revenues of nearly $10 billion, and grew revenues b about 14% from the previous year.

SOFTWARE COMPANIES RANKED BY SALES

Company                        Symbol         Price      Change          Market Cap          P/E

Microsoft Corp.             MSFT                 25.54       2.78%               273.60B      22.72


IBM Software                Private - View Profile


Oracle Corp.                ORCL                 12.64       1.53%                65.12B      22.82


SAP AG                      SAP                  42.71       0.71%                52.92B      31.06




V. Company Position

Market Information

Oracle makes software solutions for every industry. To better serve their customers,
Oracle is dedicated to obtaining and maintaining strong supplier relationships and
partnerships. This allows Oracle to provide top quality products at a competitive price to
customers.

In terms of marketing activities, Oracle takes advantage of most types of advertising
media available. Their most recent and notable campaign was released this past spring
during the NBA final series. This campaign was focused on the Oracle on Demand
solution that can be fitted to almost any industry a company is competing in. These
advertisements continue to run on cable news networks. This campaign focused both on
stirring up interest in brand new software customers, as well as attempting to make
customers of their German rival, SAP, aware of Oracle’s products. One of Oracle’s
recent strategies has been to make software that will link SAP software to their upgraded
solutions. Oracle hopes that this will draw customers away from SAP by offering a lower
price and a potentially better performing system.

Product Development, R&D


Since the founding of the company in the 1970s, Oracle has been an industry leader in
innovation, and expects to be in the future. The software industry is one that moves a
blinding pace, and companies that sit still have their products outdated and left behind.
Oracle began as primarily a relational database software supplier. As times changed
Oracle, as well as competitors such as SAP and Microsoft, had to shift strategies and
become more comprehensive service providers. As has been the trend in high tech
industries, Oracle chose to increase their product line over the past year by way of
mergers and acquisitions. Now that Oracle has successfully integrated the majority of the
companies acquired during their merger spree, they have to find a way to successfully
integrate these products into their product lines. That is where project fusion comes in.
Oracle’s senior vice president of applications describes the project: “What we're doing is
looking at the applications we have and the functionality we need to give customers the
greatest business insight possible so they know everything about their operations, deep
and adaptive business processes so they can act quickly on that information, and a
superior ownership experience in maintaining and managing their software….”
PeopleSoft, JD Edwards and the other companies acquired all specialized in one kind of
system or another, Oracle plans on taking these products and putting them into one
platform that will provide a full solution for customers.

Threat of Substitution

The threat of substitution for Oracle is negligible. Oracle has grown to be one of the
largest companies on the planet, with over 15,000 partnerships worldwide, and offices on
every continent. They provide software for every industry and have a presence and a
name that is recognized by every company. This kind of global presence does not spring
up overnight, and does not come unnoticed. Oracle has become a lot like Microsoft
where they have the power to simply buy up a company who has a product that may be a
potential threat to their system in the future, and incorporate it into their own line of
products.

Image

Recently, Oracle has experienced a problem in terms of a sour image among top
executives against Oracle. Oracle’s long drawn out court battle during the hostile
takeover of PeopleSoft is mostly to blame for this image problem. The takeover was a
very public process that pitted Larry Ellison against the employees of PeopleSoft, and
Oracle against the Department of Justice. While Oracle won that battle they face more
problems in the future as the Department of Justice is once again giving them trouble due
to their attempted acquisition of Siebel.

Management Quality

Oracle has had the same CEO since the beginning, and thus his experience and
knowledge of the software industry is a big asset to the company, despite his recent
abuses of insider trading that cost the company millions in a court decision. Their board
of directors is comprised of both internal and external members, the external members
coming from a wide array of industries as well as academia.

VI. Financial Statement Analysis
Financial Ratios

Trend Analysis (Oracle vs. S&P 500)




When we look at the chart for the past year, we see that oracle has underperformed the
market at all but a few points on the graph. On top of this, the chart also shows that
Oracle has been much more volatile than the. This is due to its growth strategy, which
causes its price to increase when mergers are announced, then drop again.

Intel vs. Industry & S&P 500- 5 most recent days (as of Sept. 14th)




Here we notice that Intel has recently outperformed the S&P 500 and performed very
closely to the industry.
Direct Comparison with Industry and Competitors
                                     ORCL          IBM       MSFT      SAP      Industry
Market Cap:                           65.22B       129.60B   276.07B   52.72B      146.65M
Employees:                            49,872       348,052    61,000   32,802             425
Qtrly Rev Growth (yoy):              25.00%         -7.80%    9.40%    13.40%         9.00%
Revenue (ttm):                        12.35B        94.38B    39.79B    9.84B        72.35M
Gross Margin (ttm):                  77.18%         39.17%   84.42%    66.16%       64.85%
EBITDA (ttm):                          4.96B        18.48B    17.51B    2.89B         8.10M
Oper Margins (ttm):                  35.69%         14.14%   41.82%    26.80%         5.62%
Net Income (ttm):                      2.90B         8.57B    12.25B    1.71B       812.00K
EPS (ttm):                              0.554        5.160     1.124    1.373             0.09
P/E (ttm):                              22.85        15.90     22.93    30.99            31.13
PEG (5 yr expected):                     1.35         1.44      1.56     2.17             1.56
P/S (ttm):                                5.30        1.36      6.87     5.38             2.39
*ttm – last 12 months yoy – year over year

While Oracle is not shown here to be very large in comparison to Microsoft and IBM,
this is deceiving since they are in somewhat different industry segments. Oracle is the
largest competitor in the application software industry, rivaled closely by SAP. Oracle’s
operating margins have been impressive to date, much higher than the industry and its
close competitors. Revenue growth has also been almost double of its close rival SAP,
and nearly three times that of the

VII. Financial Forecasts (from analysts)

                            Current Qtr          Next Qtr     Current Year   Next Year
EPS Trends
                            Nov-05               Feb-06       May-06         May-07
Current Estimate            0.19                 0.20         0.80           0.91
7 Days Ago                  0.19                 0.20         0.80           0.91
30 Days Ago                 0.19                 0.20         0.80           0.91
60 Days Ago                 0.19                 0.20         0.80           0.91
90 Days Ago                 0.19                 0.20         0.80           0.92
Source: finance.yahoo.com

Here we can see that analyst’s earnings estimates have been pretty steady at all time
intervals. All of the estimates for the current quarter, next quarter, and current year have
all remained unaffected despite all of Oracle’s legal trouble and volatile stock price. The
only estimate that has changed was a one cent decrease in next years estimate, down from
three months ago.
Growth Estimates and Trend Analysis
Growth Est               ORCL             Industry
Current Qtr.             18.8%            14.8%
Next Qtr.                25.0%            23.7%
This Year                17.6%            14.1%
Next Year                13.7%            15.3%
Past 5 Years (per annum) 10.2%            N/A
Next 5 Years (per
                         11.0%            12.65%
annum)
Price/Earnings (avg. for
                         14.8             22.34
comparison categories)
                                                             Source: finance.yahoo.com

The growth estimate for Oracle is 18.8%, 4% higher than the industry. Next quarter’s
earnings estimate is also slightly higher than the industry as is this year’s. Next year,
however, Oracle’s growth is expected to taper off and fall below the industry. These
growth numbers reflects Oracle’s growth through acquisition strategy, and their growth
numbers for the next year show that Oracle probably will not match what it did in the
past year.

VIII. Analysis of Risk

Oracle is traded on the NASDAQ under the ticker symbol ORCL, and appears on many
indexes. These indexes include: the S&P 100, the S&P 500, and the S&P 1500 Super
Composite. For the previous three months Oracle has traded at an average volume of
38,870,000 shares daily (finance.yahoo.com). The low price for the past twelve months
was $11.25, and the high was $14.87. Currently Oracle is trading in the middle of that
range at $12.69.

Marketability
     a. Trading Location – NASDAQ (ORCL) www.yahoo.com
     b. Average Volume – Last 3 months 38,870,000 www.yahoo.com

Total Risk
       c. Range 52 week range: $11.25 - $14.87finance.yahoo.com
       d. Standard Deviation 0.63

       Systematic Risk

       e. Correlation to market/industry 0.567

                                                 (X-
Date           X           Mean       X-Mean     Mean)^2      Market
   1-Nov-04        12.74      12.91      -0.17       0.0289    1117.82
   1-Dec-04        13.72      12.91       0.81       0.6561    1211.92
   3-Jan-05        13.77      12.91       0.86       0.7396    1181.27
   1-Feb-05        12.95      12.91       0.04       0.0016     1203.6
   1-Mar-05        12.48      12.91      -0.43       0.1849    1180.59
   1-Apr-05        11.56      12.91      -1.35       1.8225    1156.85
  2-May-05          12.8      12.91      -0.11       0.0121     1191.5
   1-Jun-05         13.2      12.91       0.29       0.0841    1191.33
    1-Jul-05       13.57      12.91       0.66       0.4356    1234.18
   1-Aug-05        12.99      12.91       0.08       0.0064    1220.33
   1-Sep-05         12.4      12.91      -0.51       0.2601    1228.81
   3-Oct-05        12.71      12.91       -0.2         0.04    1198.41



       f. Beta with market/industry 1.28 (Reuters)

IX. Fundamental Valuation

Estimation of Required Rate of Return
The required rate of return has been estimated from a series of data over the previous nine
years. We use the assumption here that what has happened in the past has a reasonable
change to continue in the future. The S&P 500 has been used as a proxy for the market.
Also, we use historical rates on the 1-year T-bill as an estimation of the risk free rate of
interest. For the periods 1995-2004 the historical equity premium on the market was
6.38%. In order to compute the required rate of return for Oracle we used the Capital
Asset Pricing Model:

RE = RF+ β*(Equity Risk Premium)

RE = 4.3 + (0.98) (6.38) = 10.55%

Dividend Yield

Oracle Corporation does not pay dividends.

Valuation

The valuation techniques that were used include: 1) Affordable Dividend model, 2) the
value of a stock using the constant growth model.

1. Affordable Dividend Model
d=1-(g*i/p(1+g)*(1+L)*(1-T))
 D1= 1.30

2. Value of Stock Using the Constant Growth Model
V= D*(1+g)/k-g
V= 1.499


Financial Summary

A brief snapshot of financial performance and relevant ratios includes: (as of Oct 19,
2005)

Information
Stock Price                                12.59
Market Cap                               64.91B
Beta                                        2.23
EPS                                         0.55
DPS (Annual)                                 N/A
P/E                                        22.73
Dividend Yield                               N/A
Dividend Payout Ratio                        N/A
Required Rate of Return                  18.53%
ROE                                        29.94
Forecasted Growth Rate                      11.2
X. Other Considerations

Top Institutional Holders

Holder                      Shares       % Out Value*             Reported
BARCLAYS BANK PLC           151,501,965 2.94    $1,999,825,938    30-Jun-05
STATE STREET
                            119,412,328 2.32    $1,576,242,729    30-Jun-05
CORPORATION
FMR CORPORATION
(FIDELITY MANAGEMENT & 105,197,570 2.04         $1,388,607,924    30-Jun-05
RESEARCH CORP)
VANGUARD GROUP, INC.
                            97,902,684   1.90   $1,292,315,428    30-Jun-05
(THE)
MASSACHUSETTS
FINANCIAL SERVICES CO -     78,887,837   1.53   $1,041,319,448    30-Jun-05
OTHER
DEUTSCHE BANK
                            72,141,605   1.40   $952,269,186      30-Jun-05
AKTIENGESELLSCHAFT
MONTAG & CALDWELL, INC. 65,941,703       1.28   $870,430,479      30-Jun-05
NORTHERN TRUST
                            56,388,685   1.09   $744,330,642      30-Jun-05
CORPORATION
JP MORGAN CHASE &
                            56,284,028   1.09   $742,949,169      30-Jun-05
COMPANY
PUTNAM INVESTMENT
                            54,540,751   1.06   $719,937,913      30-Jun-05
MANAGEMENT, LLC

Top Mutual Fund Holders

Holder                      Shares       % Out Value*            Reported
VANGUARD 500 INDEX FUND 42,171,060       .82    $556,657,992     30-Jun-05
Nasdaq 100 Trust-Series 1   38,189,869   .74    $430,781,722     30-Sep-04
FIDELITY MAGELLAN FUND
                            25,895,000   .50    $341,814,000     30-Jun-05
INC
COLLEGE RETIREMENT
EQUITIES FUND-STOCK         24,455,606   .47    $305,205,962     31-Mar-05
ACCOUNT
SPDR TRUST SERIES 1         22,816,356   .44    $257,368,495     30-Sep-04
VANGUARD INSTITUTIONAL
                         20,773,854      .40    $274,214,872     30-Jun-05
INDEX FUND-INSTITUTIONAL
INDEX FD
VANGUARD TOTAL STOCK
                                            20,603,317   .40   $257,129,396   31-Mar-05
MARKET INDEX FUND
PUTNAM VOYAGER FUND                         14,460,000   .28   $167,157,600   30-Apr-05
MASSACHUSETTS
INVESTORS GROWTH STOCK 14,274,450                        .28   $182,712,960   31-May-05
FUND
VANGUARD/PRIMECAP FUND 10,630,600                        .21   $132,669,888   31-Mar-05
ªMajor Holders – http://finance.yahoo.com



XI. Conclusion

Looking at current earnings and earnings estimates for the future, Oracle is not that
attractive or that unattractive. Earnings estimates have not changed very much in the past
90 days, the only change being a one 0.01 decrease on the estimates for next year.

The Beta of Oracle according to Reuters is 1.28, and based on my own regression
calculations is close to 1. This means that Oracle moves pretty close to how the market
moves at any given time. In fact Oracle has been underperforming the market as of late,
and their growth of revenues and their margins are expected to decrease next year.

Oracle is rounding out several months full of strategic acquisitions, which account for
most of their growth over that time period. With only the Siebel acquisition on the
horizon, Oracle is expected to experience a decrease in growth. How well Oracle can
create value from these recent acquisitions by incorporating the acquired companies’
products into their own product line will determine how well Oracle will perform in the
future.

Oracle has a recent history of being more volatile than the market. While the index price
has remained somewhat calm, Oracle’s price has fluctuated up and down much more than
the market, despite what the beta may suggest. This makes them appear somewhat more
risky.

Recommendation

Recommending a buy or sell decision for Oracle is fairly difficult given the different
information we have to work with. While they are experiencing good growth now, their
future outlook appears to be less enticing. Oracle has used their acquisition strategy to
attempt to gain a competitive advantage in the software industry; however it appears for
now that all they have done is created a bigger company. Given the maturing state of the
software market, I feel that Oracle will have a hard time keeping up its current growth
rates. There is also the question of whether or not the Siebel acquisition will pass
through the courts or not. If it fails to go through it could be a huge blow to the company,
and may not be worth the risk of buying the stock now. Given this information I must
recommend that we do not buy shares of stock in Oracle Corporation at this time.




Disclaimer: This analysis does not necessarily reflect the beliefs of the University of Missouri-Columbia or
the College of Business. The insights and opinions are of the students of Investment Funds Management
and should not be used in personal investment decisions. The University of Missouri and the authors of
this analysis take no responsibility for the validity of the valuation and analysis.
Finance Resources

Online
Finance Yahoo (finance.yahoo.com)
Reuters (www.reuters.com)
Oracle (www.oracle.com)

Databases
Factiva
Business and Company Resource Center

Investment Fund Management
Citigroup Inc. Analysis Report
Portfolio Committee

				
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