1. Oracle Corporation (ORCL) Covering Analyst: Joshua Jordan jjordan3@uoregon.edu

2. Oracle History ›Founded in 1977 –Larry Ellison, Bob Miner, and Ed Oates ›Incorporated in 1977 –A Series of Re-Incorporations ›Oracle Systems merged with Oracle Corporation –June 1, 1995 ›Many Acquisitions

3. Business Overview ›Software ›Hardware ›Services ›Americas (52%) ›EMEA (31%) ›Asia Pacific (17%)

4. Software Publishing Industry ›Low Concentration ›High Competition ›Enterprise Software Publishing Sub-segment –High Concentration

5. Software Business ›Software Licenses –Database Software ›MySQL –Middleware Software ›Fusion Middleware –Business Intelligence, Cloud Application Foundation, Data Integration, Java –Applications Software ›Fusion Applications, Siebel, JD Edwards –Customer Relationship Management, Supply Chain Management, Financials

6. Hardware Business ›Hardware Systems Products –Engineered Systems ›Exadata, Exalogic, SPARC SuperCluster –Servers ›SPARC microprocessor –Storage ›Sun ZFS Storage Appliance Network Attached Storage –Operating Systems ›Oracle Solaris

7. Services ›Consulting ›Managed Cloud Services ›Education

8. Oracle’s Strategy ›Retain customers through high-margin sales channels ›Innovation through research & development –Acquisitions ›Brand Name Growth ›Product Integration

9. Revenue ›Software –License Updates & Product Support –New Software Licenses ›Hardware –System Products –System Support ›Services –Consulting, Cloud, Education

10. Risks and Potential Drawbacks ›Inexperience in Hardware Systems ›Legal issues ›Competition ›Security Threats

11. Positives ›Margin growth in nearly all revenue segments ›Expansion globally ›Elite-talent retention ›Continued acquisition program ›An expanding stock repurchase program and increasing dividend

12. DCF Expectations ›Slightly increasing COGS as a percent of revenue ›Most costs increase slightly into terminal year –Personnel related ›Tax rate of 24% ›Accelerating/Decelerating rates as opposed to straight-line rates ›Increasing capital expenditures and acquisitions

13. DCF Valuation (50%) ›Possible reasons for price differential –Market Risk Premium –Beta

14. Comparables Screening ›Industry ›Business Operations ›Size ›Beta ›Growth ›Margins

15. Comparables ›Microsoft (MSFT) – 40% ›Intel (INTC) – 5% ›Salesforce.com (CRM) – 5% ›CA Technologies (CA) – 30% ›Red Hat (RHT) – 20%

16. Forward Comparables Valuation (50%) ›Discrepancies –Growth –Bottom-Line Margins

17. Final Valuation

18. Recommendation: Hold Tall Firs and Svigals ›Strong brand name with history ›Continued long-term growth –Acquisitions –High-margin sales channels ›Revenue and margin growth in competitive industry ›Marginal undervaluation

19. Questions