If you read the transcript of Oracle’s (NYSE:ORCL) June 24 fourth quarter earnings call, the related earnings press release, and the subsequent technical- and financial-press commentary concerning the call, you might get the impression that Oracle’s acquisition of Sun is going better than expected, Oracle enterprise-software sales are recovering nicely from the depths of the Great Recession, and Oracle is the bellwether of an overall recovery of the information technology (NYSE:IT) market.
All of those conclusions might be true but I urge caution for two reasons.
The first reason is purely mechanical; all of the facts are not in yet.
* How much of the compare is because it is against the doldrums of spring 2009?
* How much of Oracle’s software growth was based on Sun software and how should we adjust for that to make the compare apples to apples?
* What did Oracle stop reselling that Sun used to resell "hundreds of millions of dollars" of and how should we adjust for that to make the compare apples to apples?
* What are the implications of Sun’s open source licensing philosophy in terms of spreading out revenue and where on the income report does Oracle recognize it?
* How much did converting the euro at $1.23 affect the report when the euro averaged more like $1.33 during the quarter?
Hopefully the 10-K filing will answer some of these and similar pure modeling questions. But other questions – as Safra Catz explained – will take up to a year to be answered.
But the second reason is a feeling based on listening to the call as opposed to simply reading about it. The Oracle execs on the call sounded like they were reading the weather in Tahiti. Where was the bombast from Larry? Why didn’t Chuck beat up on SAP live the way he was quoted as doing in the press release? And about Phil Winslow’s question at the end of the call; why did Oracle duck it? The guy or machine doing the transcript could hear it (as could I).
My caution primarily applies to reading too much into Oracle’s earnings report vis a vis it being a good sign for the overall IT and enterprise software markets. The back of my napkin says Oracle was up slightly after some educated guesses about the apples-apples questions above. And if my other estimate that the overall market is not yet out of the woods, then Oracle had a good quarter in relation to the big picture.