Oracle's Hazy Future

Oracle chief executive Larry Ellison took a huge risk that has paid off. He decided to transform Oracle from a company that mostly sold database programs to one that sells many kinds of software used in all kinds of industries, from energy to insurance. The company is now the world's top seller of business software.

In less than four years, Ellison has strung together a vast array of specialty software makers, buying 42 companies for upward of $30 billion. His best-known quarry: PeopleSoft, Siebel Systems and, most recently, BEA Systems.

How well Oracle -- and its stock -- perform in the future will depend on how well the company succeeds at stitching together its many moving parts. Oracle must integrate many kinds of software so they can talk to one another.

Shares of Oracle are flat so far this year, putting them slightly ahead of both the Standard & Poor's 500-stock index and the technology-rich Nasdaq composite index. The stock is about 50 percent below its all-time high, set in 2000.

Oracle sells for a premium to the overall stock market, but that doesn't mean the stock is overpriced. It trades at 17 times the $1.36 per share that analysts expect Oracle to earn in the four quarters that end next November. That compares with a price-earnings ratio of 15 for the S&P 500, based on estimated 2008 profits.