Should You Buy Oracle Corporation (ORCL) on This Dip?

Just to get a feel for the numbers, between 1999 and 2011 – the company spent a total of $32 billion on share repurchases. Now, a single share repurchase program amounts to more than a third of the total company’s repurchases, combined. Oracle has never purchased so much of its own stock in its history.

By boosting is dividend payouts, Oracle is finally marching down the aisle with other big tech names like Microsoft and IBM which upped their dividend payouts by 15% and 12%, respectively. That’s a proper allocation for some that cash pile that these big tech names have been sitting on. In addition, Both Microsoft and IBM are highly committed to share buyback programs. In fiscal 2012 alone, Microsoft and IBM spent $3.1 billion and $10.45 billion on share buybacks, respectively. In that sense, Oracle’s recent move towards more aggressive buybacks aligns it with other shareholder friendly tech giants.

Some downside

Growth is slowing at Oracle. Revenue from new licenses and cloud subscriptions in the current fiscal first quarter will range from unchanged to an 8% increase from a year ago. That’s because the shift in corporate-computing habits is making it harder for Oracle to compete with cloud providers. Another negative metric is the company’s total asset ratio. The total asset turnover ratio measures the company’s ability to generate revenue with a given level of assets. Oracle’s total asset turnover ratio is trending lower; which suggests that Oracle is becoming less efficient with its capital.

My Foolish conclusion

I firmly believe that what we are witnessing here is a typical market overreaction over Oracle’s report. Oracle, with its cash flow generation, upcoming partnerships, and aggressive buyback program is well situated to grab a portion of its rivals’ business. This, in turn, creates a great opportunity to grab some more shares at even more attractive prices.

The article Should You Buy Oracle on This Dip? originally appeared on Fool.com and is written by Shmulik Karpf.

Shmulik Karpf has no position in any stocks mentioned. The Motley Fool owns shares of International Business Machines (NYSE:IBM)., Microsoft, and Oracle. Shmulik is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.