One of the harsh truths of the cloud market is that it's mostly off in the future. Today, enterprises are buying virtualization that improves the efficiency of data centers and applications that make use of their data stores.
So while Oracle (ORCL) has been talking itself up as a cloud company, in the real world it is devoted to vertical enterprise applications. The purchase of DataRaker, which does data analysis for utility companies, is in keeping with this strategy.
What's the difference between virtualization-with-big-data and cloud? The former is based on existing hardware resources, the latter is a completely new model. The first delivers what the latter claims to. The first lives in the real world, and the latter is an evolution. The first, in short, makes money now and the latter may make money later.
Oracle wants to make money now.
And it is making money now. Despite all the talk (including my own) about Oracle being doomed, dooo-o-o-omed, in the cloud era, the company's results remain strong. The stock is up almost 35% this year, and then there's the 18 cent/share dividend, which will go nowhere but up. Despite having the boat anchor of the old Sun Microsystems hardware business stuck to it, and despite being unable to monetize that company's open source software, Oracle is still bringing one dollar in four to the bottom line, and year-over-year revenues are fairly stable.
What's happening is that old technology is gradually being written down, new enterprise apps are being milked for all the cash they can deliver, and the company is being slowly re-engineered. It doesn't look gorgeous, but compare it with what's happening at rivals Dell (DELL) or HP (HPQ) and it begins to look very sweet indeed. Plus, with COO Mark Hurd ready to take over from aging CEO Larry Ellison whenever he says the word, they have leadership visibility.
Small wonder that the average recommendation of 44 analysts for Oracle is overweight. Expect a gradual move out of stocks like Microsoft (MSFT) to continue over the next year, as Oracle becomes the lead technology stock for conservative investors.
Oracle may indeed be doomed, dooo-o-o-omed, one day. But it is not this day. And for many investors, that's good enough.