Is Oracle Corporation (NYSE:ORCL) Ready To Split Its Business?

Boston, MA 10/07/2014 (wallstreetpr) – Close on the heels of Hewlett-Packard Company (NYSE:HPQ) announcing a split in its business unit, analyst started to probe the potential candidate to effect a similar move. One among the companies to figure in the analyst list was Oracle Corporation (NYSE:ORCL). However, will the company oblige the analyst expectations?

There are six other companies in analyst list for potential split. Significantly, eBay Inc (NASDAQ:EBAY) too announced its decision to split PayPal as a separate company last week. The trend seems to be in favor splitting the current business in contrast to consolidation through merger and acquisition.

Potential Candidate

According to a report in CNBC, Dan Ives, Managing Director of FBR Capital Markets, has listed seven companies for a potential split in the future. He predicted that three companies in the technology sector would follow the way HP has shown.

One of the primary reasons to include Oracle was the growing importance for cloud computing. Oracle Corporation (NYSE:ORCL) was also focusing its efforts more towards creating software, as well as, adding clients. That could give an edge to compete with the rivals more vigorously.

Oracle Corporation (NYSE:ORCL)’s first quarter results also demonstrated the growth of cloud computing contribution. While the overall revenue growth was 3% in the first quarter, revenue from cloud software-as-a-service and platform-as-a-service increased 32.7% to $337 million from $254 million. Similarly, its cloud infrastructure-as-a-service contributed revenue of $138 million, up 26.6% from $109 million in the previous year quarter. Together, their revenue grew 30.85% to $475 million from $363 million.

Its total revenues from software and cloud advanced 6% to $6.58 billion, while total hardware systems revenue dipped 8% to$1.17 billion over the year-ago first quarter.

Analyst Take

CNBC reported quoting Dan Nathan of RiskReversal.com as saying that Oracle Corporation (NYSE:ORCL) is a potential candidate for splitting its business in the future though he said that Oracle should not split. While it is premature to say whether Oracle Corporation (NYSE:ORCL) would take a call, the recent trend of the two big technology companies within a short span of time suggest that nothing can be ruled out.

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Published by Nicholas Maithya

Nicholas is a Financial Analyst by profession, who enjoys writing about investments, technological developments, business, economics and other financial topics at various financial publications. Join him here on Wallstreetpr.com as he endeavors to deliver to you the latest breaking news on the above mentioned fronts. Contact him by email at nmaithya@gmail.com or follow Nicholas Kitonyi @nmaithyak on Twitter.

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