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by Michelle Jones

Wedbush analysts say they're a bit less skeptical on Oracle's traction in the cloud but they're not 100% convinced that all is well

Oracle Corporation (NYSE:ORCL) appears to be gaining some ground in the cloud market, according to Wedbush analysts, although they're not seeing the dramatic transition some other analysts are seeing. Nonetheless, they still think Oracle "will likely have an important place in the new world order."

Oracle hosts cloud forum

In a report dated June 25, 2014, analysts Steve Koenig and Kevin Ikeda said they attended Oracle's second Cloud Forum this week. The company focused on its strategy, stories from customers, metrics and go-to-market. They say some of the claims Oracle management made seem like a bit of a stretch, although they are now a bit less skeptical on the company's traction in the cloud.

At the forum, Oracle said they have thousands of software as a service sales representatives in more than 60 countries. The company also said that it has more than 7 million Fusion subscribers, which the Wedbush team thinks indicates that Oracle is seeing less than $5 per month per subscriber in revenue. As a result, they believe that the company is either buying its share of the software as a service market or else just exaggerating its subscriber count. They said it's possible the company could be doing a little of both as well.

No questions asked

Koenig and Ikeda think it's strange that analysts weren't allowed to ask questions of the customers who attended the forum. However, they said some of the commentary that was made was indeed encouraging. They heard two main themes throughout the forum" Oracle's plan to create an integrated product sweet and the company's unrivaled database-level security.

The Wedbush analysts think Oracle has smartly identified a pain point for customers. The company said enterprise customers prefer just a few point solutions, rather than dozens of them, and a suite of applications and a platform all from one vendor. They call the logic "compelling" but said they think it will be difficult for Oracle to make itself the preferred vendor. So far, they're seeing some traction in Fusion through their checks, although Fusion just takes care of part of what's needed.

They think that so far Oracle has had mixed results in trying to plug the holes in its offerings through software as a service acquisitions. They think the reason for this is because of high turnover problems with some of the companies Oracle has acquired.

The Wedbush team reiterated their Neutral rating and $40 per share price target on Oracle.

Source: Oracle Corporation: No Transition Just Yet