Today: Oracle reaches its highest stock price since 2000 as Wall Street enjoys its best day of the year to bounce back from brutal start to December.
The Lead: Oracle shoots higher on optimism for cloud initiative
Oracle soared to its highest stock price Thursday since the dot-com boom went bust, with the Redwood City software giant’s growing cloud offering spurring its best day on Wall Street in five years.
Oracle shares jumped 10.2 percent to $45.35, pushing the company’s valuation near $184 billion, topping Intel for the fourth-highest market cap for a Silicon Valley tech company, behind only Apple, Google and Facebook. The gain was the largest in the SV150 on the day and stood out even as Wall Street enjoyed its strongest trading session of the year for a second consecutive day.
The impetus for Thursday’s gains was the earnings report Oracle released Wednesday afternoon, which led to chairman and founder Larry Ellison crowing about his firm’s advances in cloud offerings, a platform he previously eschewed while allowing former Oracle executive Marc Benioff to grow a powerhouse cloud pioneer in Salesforce.
“Next year, Oracle will sell about the same total dollar amount of new SaaS and PaaS business as cloud market leader Salesforce.com,” Ellison said Wednesday. “Stay tuned, it’s going to be close. We’re catching up to them and we’re catching up very quickly.”
Analysts mostly praised Oracle in Thursday morning notes, arguing that the company is likely stealing market share from Salesforce, though that didn’t seem to hurt the San Francisco software company on Wall Street: Salesforce shares increased 4.1 percent to $59.33.
“For many years, Salesforce.com benefitted from being the only major software company seriously competing in the cloud. That is no longer the case,” Mark Moerdler of Bernstein Research wrote. “We expect Oracle, along with Microsoft, to take share from Salesforce.com. Additionally, Salesforce.com will likely face strong pricing pressure as these major companies continue to grow their offerings at lower price points.”
Canaccord Genuity analyst Richard Davis bluntly stated “Oracle is not perfect,” and brought up its late cloud adoption, but predicted that its advances in the area would help turn around sentiment on Wall Street.
“We believe investor opinion on Oracle’s stock, which in our conversations ranges from indifference to dislike, will change for the better,” Davis wrote.
Still, there are Oracle doubters, most of whom believe that the company is simply shifting customers of traditional software that is sold and operated at the customers’ businesses instead of delivered over the Internet.
“We believe cloud progress is being made, but at the expense of on-premise, even though Oracle seemed to indicate that much of its cloud business is new rather than on-premise conversions,” MKM Partners analyst Kevin Buttigieg wrote.
SV150 market report: Tech stocks rally, but Silicon Image plummets
Wall Street indexes roared more than 2 percent higher across the board Thursday, as a rally that started the day before continued to pull stocks back from steep drops suffered in the first half of December. Silicon Valley tech stocks soared even higher, adding 3.2 percent despite a steep drop from a Sunnyvale chipmaker.
Silicon Image was one of only 10 SV150 stocks to suffer a decline Thursday, but its drop was sharp: The manufacturer of chips for mobile gadgets plummeted 27.3 percent to $4.90, losing more than a quarter of its market cap after announcing that it expects revenues to decline by 10 percent next year. The company said in a news release that it expects sales to drop “due to a reduction in mobile design wins at one of its largest customers,” though CEO Camillo Martino said that he expects the company to maintain its operating margin despite the drop. Silicon Image was far and away the biggest loser in the SV150 on Thursday: The next largest drop was from Trulia, which declined 2.9 percent to $45.99 as shareholders voted to approve the San Francisco company’s acquisition by rival Zillow.
Elsewhere in Silicon Valley, “rebound” was the word of the day. Apple continued to bounce back from a December decline, gaining 3 percent to $112.65 as a BBC report claimed violations of workplace standards at Asian suppliers’ manufacturing centers and Cupertino approved a move to ensure Apple controls access to its new headquarters. CEO Tim Cook, who recently became the first major active CEO to openly identify as gay, donated an undisclosed amount to a gay-rights initiative in his home state of Alabama. Google gained 1.6 percent to $514.62 as a report indicated the Mountain View Web giant is trying to win a dismissal in an Android antitrust suit. Netflix barely gained, increasing 0.2 percent to $334.42 as rival Hulu won exclusive rights to some FX shows. Tesla Motors continued to storm back after falling lower than $200 for the first time since June, gaining 6 percent to $218.26, and GoPro declined 4.1 percent to $57.09 after a Morgan Stanley analyst dissed the San Mateo company’s video-editing software. Facebook added 3 percent to $78.40 as its Instagram photo-sharing service cracked down on spam accounts, and rival Twitter gained 3.3 percent to $36.73.
Down: Silicon Image, Trulia, Audience, Extreme Networks, Verifone, Aviat, Ultratech, Wageworks, Exar, Gigamon
Up: Everything else
The SV150 index of Silicon Valley’s largest tech companies: Up 52.14, or 3.17 percent, to 1,694.9
The tech-heavy Nasdaq composite index: Up 104.08, or 2.24 percent, to 4,748.4
The blue chip Dow Jones industrial average: Up 421.28, or 2.43 percent, to 17,778.15
And the widely watched Standard & Poor’s 500 index: Up 48.34, or 2.4 percent, to 2,061.23
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