On The Fly: What to watch for in Oracle's earnings report

Oracle (ORCL) is scheduled to report results of its fiscal fourth quarter after the market close on June 19, with a conference call scheduled for 5:00 pm ET. What to watch for: 1. Q EPS CONSENSUS HIGHER: On its third quarter conference call, Oracle guided for Q4 adjusted earnings per share of 92c-95c on revenue growth of 1%-3%. At the time, analysts expected the company to report Q4 EPS of 90c on revenue of $11.21B, but those figures have since changed to 94c and $11.19B, respectively. 2. PENTAGON CONTRACT: On April 13, Bloomberg reported that Oracle was leading a "loose coalition of technology companies" that included Microsoft (MSFT), IBM (IBM), HP Enterprise (HPE), and Dell in a campaign to prevent Amazon (AMZN) from being the sole-source provider on the U.S. Department of Defense's Joint Enterprise Defense Infrastructure contract, which could potentially be a $10B deal. A few days later, Bloomberg reported that Oracle co-CEO Safra Catz told U.S. president Donald Trump that the contract makes "no sense" as the Pentagon's plan is to find just one provider. On May 31, Bloomberg said that the Penatgon had delayed indefinitely its final request for proposals that will spell out requirements for the JEDI contract. 3. M&A: Oracle has been actively pursuing acquisitions over the past couple of months, starting with its agreement to acquire Grapeshot that was announced on April 24. Grapeshot is a provider of brand safety and pre-bid contextual solutions to over 5,000 of the world's leading marketers, according to Oracle. A week later, Oracle said it completed the acquisition of Vocado, which provides a student-centric, cloud-based financial aid solution for higher education institutions. In mid-May Oracle said it had signed an agreement to acquire DataScience.com, whose platform centralizes data science tools, projects and infrastructure in a fully-governed workspace. Financial terms were not disclosed for any of these transactions. 4. JPMORGAN DOWNGRADE: Last week, JPMorgan analyst Mark Murphy downgraded Oracle to Neutral from Overweight and cut his price target for the shares to $53 from $55. The analyst said that, while the shares have risen from the $30s into the high $40s over the last two years, the company's fundamental performance has remained inconsistent. In addition, Murphy noted that in his firm's recent survey of 154 chief investment officers, Oracle received the largest number of indications for planned spending contraction this year, materially more than the second-worst company. The analyst noted that the results of his firm's CIO surveys over the years "have been highly predictive."