FBR thinks Oracle (ORCL) “could likely beat” FQ4 expectations on Wednesday due to “seasonal trends that enabled the database business to put together strong results and the applications business to bounce back nicely from a disappointing FY 3Q08.” FBR is also upbeat ORCL’s acquisition of BEA Systems could drive future upside:
ORCL expects its acquisition of BEA to be at least $0.01 to $0.02 accretive on a non-GAAP basis in the first full year (FY09). The accretion stems mainly from BEAS’s highly profitable recurring stream of maintenance revenues. We estimate the accretion could be $0.04 and note that ORCL has a great track record of integrating its acquisitions and driving higher accretion than it initially suggests to the Street.
Also, FBR thinks that BEA could add $20 million in licence revenues to a database and middleware licence business on top of Oracle’s core growth:
Solid database quarter. We believe ORCL should at least meet our database and middleware licence estimate of $2.0 billion, which is also the average Street expectation. Our licence estimate represents 15% YOY growth and does not include any contribution from BEA. We think BEA could add about $20 million of licenses. We believe database licenses benefited from growing demand for 11g, which was released last August, and continued uptake of database options such as real application clustering (RAC), enterprise manager, database vault, and audit vault.
FBR maintains Outperform rating and $25, target.