The Zacks Analyst Blog Highlights:Oracle, LinkedIn, Salesforce.com, Adobe and Chico's FAS

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Dec 24, 2013, 09:30 ET

CHICAGO, Dec. 24, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Oracle Corp. (NYSE:ORCL-Free Report), LinkedIn (NYSE:LNKD-Free Report), Salesforce.com (NYSE:CRM-Free Report), Adobe (Nasdaq:ADBE-Free Report) and Chico's FAS, Inc. (NYSE:CHS-Free Report).

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Here are highlights from Monday's Analyst Blog:

Oracle Buying into the Cloud

Oracle Corp.'s (NYSE:ORCL-Free Report) recently announced acquisition of Responsys Inc. is expected to bolster its position in the cloud-based enterprise marketing software sector. The current acquisition complements Oracle's early 2013 acquisition of Eloqua.

Oracle is paying approximately $1.5 billion ($27.00 per share) for Responsys and the transaction is expected to complete by the end of first-half 2014. This represents a 38.3% premium to Responsys closing price of $19.52 on Dec 19, much higher than what Oracle paid for RightNow (2011) and Taleo (2012).

San Bruno, California-based Responsys helps customers to create and manage marketing campaigns through e-mail, mobile and social marketing. The company earned revenues of $163.0 million in 2012 and is estimated to earn revenues of approximately $200.0 million in 2013.

We believe that the premium is justified as the acquisition will improve Oracle's market position. It will help Oracle to better address the needs of Chief Marketing Officers (CMOs), as spending on cloud-based marketing software is expected to be much higher than overall IT spending.

Responsys has a strong clientele of approximately 450, which includes the likes of LinkedIn (NYSE:LNKD-Free Report), Nordstrom, Lego, Southwest Airlines and United Healthcare. This will boost Oracle's customer base. Moreover, the acquisition will improve Oracle's competitive position against the likes of Salesforce.com (NYSE:CRM-Free Report) and Adobe (Nasdaq:ADBE-Free Report).

Over the last 12 months, both Salesforce and Adobe have been on an acquisition spree to boost their competitive positions. Over this period, Salesforce bought ExactTarget, Buddy Media and Radian 6, while Adobe made a string of acquisitions (including Neolane) that improved its marketing software product offerings.

We believe that Oracle, being a late entrant to the cloud computing field, will continue to pursue strategic acquisitions to improve its market share and top-line growth. The company reported better-than-expected second-quarter 2014 results, with cloud bookings increasing 35.0%.

Engineered systems bookings also jumped 35.0% in the quarter. We believe that the speedy adoption of engineered systems and cloud suites will drive incremental top-line growth, going ahead. Moreover, Oracle's strategy of providing end-to-end solutions will further attract new customers in the long run.

Currently, Oracle has a Zacks Rank #2 (Buy).

Chico's Announces Share Buyback

Fort Myers, Florida-based specialty retailer,Chico's FAS, Inc. (NYSE:CHS-Free Report), recently declared its board of directors' decision to cancel the Mar 2013 share repurchase program and approve the new share repurchase program. The latest buyback scheme reflects the company's sound financial position and favorable prospects.

The new share repurchase authorization permits Chico's to buy back a maximum of $300 million of its outstanding shares. With this, the company cancelled its Mar 2013 share repurchase program of worth $300 million, which had $55 million worth authorization remaining for buyback.

So far, in fourth-quarter fiscal, Chico's purchased nearly 6.7 million of shares for approximately $125 million. Year-to-date in fiscal 2013, the company bought back approximately $283 million worth of its common shares.

The company has a consistent track record of returning cash to shareholders through share repurchase and dividend payouts. Prior to this, on Nov 26, the company's board declared a cash dividend of 7.5 cents for the quarter, up 2 cents from third-quarter 2013. On an annualized basis, the dividend hike reflects a 36% jump.

The company's dividend has approximately doubled since 2010. From 2010 to date, Chico's returned $690 million to stockholders through dividends and share buybacks.

The company's strategy of paying regular dividend and increasing the same reflects its commitment to enhance long-term value for shareholders. It also depicts the company's ability to boost earnings as well as cash flows in the long run.

The strong balance sheet of Chico's, along with its cash flow provides financial flexibility in shareholder-friendly moves. The company generated operating cash flow of $175.1 million during the first three quarters of fiscal 2013 and ended the third quarter with cash and cash equivalents as well as marketable securities of $249.8 million.

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