Oracle Corporation: ORCL Stock Overcomes a Major Hurdle

oracle stockOracle Stock to Gain Further from Cloud Play

Oracle Corporation (NYSE:ORCL) stock gained about two percent and closed at $39.09 in the last trading session.

ORCL stock has been in the headlines amid uncertainties related to its acquisition of NetSuite Inc (NYSE:N). The offer to acquire the cloud storage company was made in July of this year in order to compete with rival enterprise software companies.   

On Monday, Oracle closed its acquisition of NetSuite, which cost Oracle $9.3 billion. The deal was completed as the majority of NetSuite shareholders agreed to tender their shares.

Oracle announced its plans to acquire the cloud software company in July 2016 and offered $109.00 per share in cash. The deal had faced uncertainty after NetSuite’s largest institutional shareholder, T. Rowe Price Group Inc (NASDAQ:TROW), stated that the offer was too low and asked Oracle to raise its bid to $133.00 a share.

The enterprise technology company has been struggling with its shift to cloud computing as other competitors gained market share. Alphabet Inc (NASDAQ:GOOG, GOOGL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN) are ahead of Oracle in cloud-based services.

This merger deal is significant, as it helps Oracle move beyond database and application markets.

Although Oracle’s cloud software and cloud platform businesses are growing, much needs to be done as the competition intensifies in this space. Most of the company’s revenues come from its software licenses, and its hardware business is declining. Oracle had posted below-expectation earnings and revenue for its first fiscal quarter of 2017. This has hit ORCL stock hard.

Oracle stock has been facing pressure due to growth concerns. Oracle co-founder Larry Ellison, however, has said that Oracle’s infrastructure as a service (IaaS) will be much more powerful than the market leader, Amazon.com’s “Amazon Web Services.”

oracle-corp-nyse-chart

Chart courtesy of StockCharts.com

Both Oracle and NetSuite provide business applications that automate operations in areas such as finance and human resources. The NetSuite acquisition would boost Oracle’s cloud-computing offerings, where the company needs to add services.

The NetSuite acquisition would boost Oracle’s cloud-computing offerings, where the company needs to add services.

The acquisition of NetSuite puts Oracle in a new league, and that will eventually be positive for the stock.