Why Revenues Are Key To Oracle Earnings

Jill Malandrino was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.

Since the middle of April, Oracle Corporation ORCL has traded in a $43 to $45 range. That range comes alongside a historically small range in the broader market, said TheStreet's Options Profits Product Development Manager Jill Malandrino. Oracle reports earnings after the bell on Wednesday, with the Estimize consensus calling for EPS of $0.91 and revenues of $11.147 billion.

It is the revenues figure, Malandrino said, that make up the difference between a good and poor quarter. Malandrino reminded listeners that in the company's last earnings report, it beat on earnings, but saw a decline in revenue - a trend she said was prevalent in many of the legacy tech names. Therefore, the key moment in the stock will come "when the company can start to produce less-than-disappointing results and start to turn that revenue story around."

However, this quarter may not be that quarter. Malandrino said that it takes a long time for the legacy tech names to "right-size the ship." That may involve some acquisitions, but must involve organic growth as well. That means a focus on Big Data, cloud and storage - and competing with salesforce.com, inc. CRM and Workday Inc WDAY.

Oracle stock has declined 0.7 percent year-to-date, underperforming the S&P 500 by more than 2.5 percent. The company has performed in line with many other "legacy tech names," with Microsoft Corporation MSFT declining 1.3 percent year-to-date.