Wall Street Cheers Oracle-PeopleSoft Deal

Wall Street cheered the news Monday that Oracle had won its long takeover battle with PeopleSoft , sending both stocks 10% higher on the day.

Stocks of acquiring companies often take a hit on the news, but investors had plenty to cheer about on Monday. For starters, the deal was largely expected and ends a long period of uncertainty. Oracle said the merger will begin adding to its bottom line early next year, and the company also delivered earnings and guidance that beat Wall Street expectations.

Oracle’s earnings of 16 cents a share beat analysts’ estimates by 2 cents, and revenues of $2.76 billion beat $2.64 billion forecasts. New license and applications sales were strong. Oracle also predicted February quarter earnings of 14-15 cents a share on revenues of $2.7-$2.79 billion, again better than expected.

All in all, a triumphant day for Oracle. And now comes the hard part: getting the merger to work after one of the longest and nastiest takeover battles in recent corporate history.

The broader market surged Monday on news of the merger and better than expected retail sales. The Federal Reserve is expected to raise interest rates for the fifth time this year on Tuesday.

The Nasdaq surged 20 to 2148, the S&P 500 gained 10 to 1198, and the Dow rose 95 to 10,638. Volume declined to 1.43 billion shares on the NYSE, but rose to 2.1 billion on the Nasdaq. Advancers led 22-10 on the NYSE, and 19-11 on the Nasdaq. Upside volume was 74% on the NYSE, and 75% on the Nasdaq. New highs-new lows were 240-16 on the NYSE, and 138-10 on the Nasdaq.

Motorola gained 5% on news of a reorganization.

3Com fell 8% on news of an acquisition.

Z-Tel soared 65% after the company raised guidance.

Autobytel plunged 30% on a warning.

Ditech lost 8% on concern about the effect of a possible Nextel-Sprint merger.

OmniVision fell 9% after the company restated its results to correct revenue recognition issues.

Portal Software fell 6% after the company delayed its earnings release.

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