Equity markets today are reacting negatively to an earnings miss from Oracle, seen as a bellwether for enterprise IT spending.*
While we are not shareholders of Oracle, we do invest in many other technology companies (see discussions in previous posts here and here for example), and we believe that the same tidal wave of increased data usage that we have been writing about for years will have a huge impact on businesses of all sizes.
The Street is reacting to Oracle's miss by punishing the company's stock (down over nine percent today so far) and the stocks of many other companies involved in the "unstoppable wave" of data, but we believe this reaction is overblown. This is especially true in light of the fact that some of the revenue issue at Oracle was likely driven by company-specific changes taking place at Oracle, which deserve to be evaluated over a longer period of time than a single quarter or even a few quarters.
The Street is reacting to Oracle's miss by punishing the company's stock (down over nine percent today so far) and the stocks of many other companies involved in the "unstoppable wave" of data, but we believe this reaction is overblown. This is especially true in light of the fact that some of the revenue issue at Oracle was likely driven by company-specific changes taking place at Oracle, which deserve to be evaluated over a longer period of time than a single quarter or even a few quarters.
The bigger picture for investors is the importance of seeing through the sensationalist tendencies of the financial media, and the inevitable over-reactions of the market (which tends to react first and ask questions later), and to focus on getting to the real story underneath the headlines on any given day.
* At the time of publication, the principals of Taylor Frigon Capital Management did not own securities issued by Oracle (ORCL).