Oracle – The leader of the database market
With a market cap of ~$175 billion, Oracle (ORCL) leads the database market on a revenue basis with a 44% market share. Gartner reported that Microsoft (MSFT) SQL Server platform and IBM (IBM) DB2 are other leading players.
Operating segment performance
As the above chart shows, Oracle’s revenue growth is flattish or moderately increasing. But by cost cutting measures, integration of its products and offering has led to higher net income growth, even in times of slow revenue growth.
Cash, debt, and free cash flows
As of July 31, 2014, Oracle generated a FCF of $14.7 billion. It holds cash reserves worth $24 billion. It has a total debt of $32.5 billion. The company declared a cash dividend of 12 cents per share. All these figures imply that Oracle has a strong balance sheet and it’s returning value to its shareholders through buybacks and dividends.
Investments in research and development and acquisitions
In the last ten years, Oracle has spent approximately $50 billion to acquire about 100 companies. It spent $5.2 billion on R&D (research and development) in 2013. It spends approximately 12%–13% of total revenues on R&D. Oracle is pursuing acquisitions as well as investments in R&D to expand its presence as well as build its competitive edge.
Oracle’s strategic acquisitions, its focus on growth and high margin technologies, strong cash reserves, steadily increasing free cash flows, and low debt levels instill confidence in shareholders that Oracle can perform in the competitive business environment.