Oracle’s server business to be scrutinized in 1Q

SAN FRANCISCO (AP) ? Oracle Corp.’s quarterly earnings report Tuesday comes at a time of flux for the information technology industry. But Oracle’s business model, which is based heavily on software-support contracts, is giving analysts hope that it will be a stabilizing force.

WHAT TO WATCH FOR: Signs of the health of Oracle’s server business, which it acquired in last year’s purchase of Sun Microsystems.

Last week, Pacific Crest Securities analyst Brendan Barnicle lowered his outlook on Oracle based on lower forecasts for Oracle’s hardware and software lines. He cited deterioration in the Sun server business and ongoing economic weakness.

Since Oracle bought Sun Microsystems last year for $7.3 billion, Sun’s share of the server market has declined by a full percentage point, to just about 7 percent. Oracle has said it is shedding the least-profitable deals. Meanwhile, IBM Corp.’s server share has grown.

Barnicle emphasized that his firm remains buyers of Oracle stock. Most of the risk has been baked into the price, he said. The stock has been flirting with the bottom of its 52-week range.

WHY IT MATTERS: Oracle is at the center of an important shift in the technology industry. It and Hewlett-Packard Co. are starting to look more like IBM Corp. as the industry moves toward a one-stop-shopping model. As one of the world’s biggest business software makers, its results help illustrate companies’ demand for technology.

Its database software is the world’s most widely used.

WHAT’S EXPECTED: Analysts polled by FactSet expect Oracle to have earned 47 cents per share, excluding items, on $8.36 billion in revenue. The quarter being reported is Oracle’s first quarter of its 2012 fiscal year.

LAST YEAR’S QUARTER: In the same period last year, Oracle earned 42 cents per share, excluding items, on $7.5 billion in revenue.