Oracle: Is The Best Yet to Come?
Many analysts, such as Barron’s, have recently downgraded Oracle’s stock to neutral. In their notes they said that Oracle was, “Not accumulating cloud growth.” Today, Oracle’s press release to its investors said that the company missed its projected revenues for fiscal year quarter 3. The recent wave of negative press does not seem to have CEO Larry Ellison on the defense. In fact, Ellison and the crew at Oracle are on the offensive touting their new offerings for the cloud that they say will change the way we do databases. When should cloud engineers and CIOs expect to see a new generation of Oracle products? A report at ZDNet shows that Oracle is set to release a new lineup of cloud products in summer 2014.
Those products include in-memory technology featured alongside Database 12c which is slated to become a revolutionary database innovation for the cloud. All of Oracle’s fusion apps will receive updates and Oracle will debut their new IaaS and PaaS offerings for the world to enjoy.
Larry Ellison mentioned, “The infrastructure as a Service is going to be priced pretty much equivalent to Amazon. We think that’s a commodity business, and not in any way a bad — in a bad sense. To play that game, you have to be — we’re going to have a compute service and a storage service. The storage service is already out. The compute service is going to be released en masse shortly. And that will be very competitive, we think, with Amazon or anybody else in this business.”
Analysts still aren’t keen on Oracle. In social media circles, some have commented that Oracle’s excuse for not hitting their earning targets revolved around Venezuelan currency manipulation. Peter Goldmacher, analyst for Cowen, noted that the flat software sales were the reason for missing earnings. Goldmacher was noted as saying the Venezuelan currency crisis has nothing to do with Oracle’s performance.
Management at Oracle has mentioned that a transition to cloud sales also has an effect on the numbers presented by Oracle. The license to cloud model has skewed the numbers that Oracle investors are used to seeing. Peter Goldmacher disagrees with this excuse. The noted Oracle analyst was quoted as saying, “Software sales fell short of expectations, which management attributed to an increasing contribution from its Cloud business. Assuming a 3-year contract duration, this would mean the company generated $5M-$10M in subscription revenue in the quarter in lieu of $65M-$70M in license revenue. Given that Cloud organic constant currency growth in subscription is only in the high single digits, we infer the company is finding it difficult to generate growth no matter the delivery method.”
All of this begs the question in regards to Oracle: Is the best yet to come? Is there room for growth or has the software and database giant missed the ship when it comes to the cloud?
