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International Business Machines Corporation Message Board

  • topinvestgun1 topinvestgun1 Jul 3, 2013 12:54 AM Flag

    comparing Oracle vs IBM, Oracle is much cheaper?

    I like Oracle better in terms of valuation and growth. They are both around 10 forward P/E but IBM will have the restructuring charge this coming two quarters. Oracle bit IBM both on gross margin and net margin. PEG ratio, IBM is lower than Oracle as well. What do you think?

    Sentiment: Strong Buy

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    • Buy all the Oracle you can afford as soon as you can.

      Please yourself.

    • Isn't that like comparing eggs to apples........?

    • ORCL is a great company. It has much higher overall margins because of the larger % of software in its sales.

      In lean times, ORCL will see earnings go down faster than IBM as was the case in 2009. IBM's revenue base is moire diversified than ORCL when you consider Services and Finance - GFS.

      ORCL trades at about 3.75x its sales while IBM trades around 2x sales reflecting IBM's lower margins and slower growth.

      So I can't agree that ORCL is much cheaper. Interestingly for this year, the composite analyst estimate for ORCL operating earnings is around 8% growth while IBM's estimate is closer to 9%.

      • 1 Reply to mr_dinky_dot_bomb
      • Good point. Since we are in the recovery cycle, I guess sales in Oracle will increase further and faster. A lot of companies has money to deploy. I will wait for IBM to write off its restructuring charge first before I consider it. Thanks for the insight. I know both are dominating in the market and making money. I just don't like IBM sending jobs off shore, very personal feeling. In long term, I think it is bad for North America and depleting skills to software engineer and innovate.

        Sentiment: Strong Buy

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