Oracle misses by $0.02, misses on revenue

Oracle (ORCL): Q4 EPS of $0.68 misses by $0.02.

Revenue of $9.3B (+3.7% Y/Y) misses by $60M.

Shares -6.4%. AH

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Comments (23)
  • Phil64
    , contributor
    Comments (23) | Send Message
    Are you guys serious? Oracle misses Q3FY14 EPS estimate by $.02 cents and .6% on revenue (per some analyst estimates) and this is bad news?? You must be kidding? Have you seen that hardware revenue is UP BY 8%? First quarter ever to show hardware revenue gains since acquisition of Sun 3+ years ago??? Especially when IBM has announced 5+ quarters of double-digit hardware declines, along with HP for last how many quarters?
    18 Mar 2014, 05:27 PM Reply Like
  • markl74
    , contributor
    Comments (3) | Send Message
    Two questions regarding hardware sales:
    1) How much of the hardware "sales" are to its own cloud operations infrastructure?
    2) What percentage of revenue is concentrated among their top 10 clients (say, Salesforce and a few banks)?
    19 Mar 2014, 02:45 AM Reply Like
  • markl74
    , contributor
    Comments (3) | Send Message
    How much of the hardware revenue was selling hardware to its own cloud operations?
    19 Mar 2014, 02:45 AM Reply Like
  • Kansiov
    , contributor
    Comments (10) | Send Message
    Automated algorithmic trading doesn't care.
    19 Mar 2014, 02:58 AM Reply Like
  • tom bernardi
    , contributor
    Comments (496) | Send Message
    another tech dinosaur in the gradual decline. why own this stock?
    18 Mar 2014, 05:35 PM Reply Like
  • Dantes_Will
    , contributor
    Comments (409) | Send Message
    Oracle will lose the cloud wars for several reasons.


    The key is that Oracle keeps putting out second rate "next gen" SaaS functionality that is always an iteration behind what Workday and more nimble competitors put out. And they do this on purpose. Oracle can't kill its massive cash cow in their legacy software model and keeps delaying key functionality in their cloud software for fear of cannibalizing their traditional sales.


    As a result, Oracle's GlobalHR and Workforce suites have fairly poor reviews and adoption among the HR community. This is not a forward looking winning strategy in today's fast changing business environment.
    19 Mar 2014, 12:54 AM Reply Like
  • Phil64
    , contributor
    Comments (23) | Send Message
    Another Tech Dinosaur? With 400,000+ customers and $37BN/year revenue with continuing revenue gains quarter after quarter? Who do you think Fortune 1000 customers will bet their enterprise IT on? Not some new startup of the day, with maybe great ideas but no staying power and lack of long term viability and proven leadership. Oracle is the only tech giant that’s actually continuing to report revenue gains, showing growth, showing leadership in 50+ market categories, especially in markets its focusing on, like Engineered systems and Cloud.
    19 Mar 2014, 10:51 AM Reply Like
  • banmate6
    , contributor
    Comments (1550) | Send Message
    Phil, this is good news in my view. Oracle is proving that it can and will win in the cloud computing space. Likewise, so will Microsoft, SAP, & IBM.


    All these vendors can provide the whole cloud computing stack: IAAS & PAAS on INTEGRATED SAAS applications. So many pundits miss the deep implications of the term "integrated" here. Suffice it to say, a lot of CIOs are learning the hard way that there is a price to pay when you have your CRM on SalesForce, your HR on WorkDay, and your expense reporting on Concur.


    First of all, there is the sheer cost. Hosted software at many vendors is more expensive past some # of employees than using a colo. Secondly, there is an issue with maintaining multiple credentials across these applications. Third, there is the challenge of developing integrated apps, both in terms of physics and data consistency.


    Physics means data cannot be shipped from SalesForce and WorkDay quickly, be it for real time application support or integration into a data warehouse. Moreover, SalesForce uses Oracle relational database technology whereas WorkDay uses a proprietary binary object store.


    The big vendors are using common data models with APIs to build custom applications that can access co-located data across various SAAS applications. The way I see it, the pure SAAS companies are in big trouble going forward...not least because they don't make money. And given that they rely on IAAS and PAAS from the big vendors, they have little pricing power.


    Oracle, SAP, Microsoft, IBM, Cisco, and Intel have immense cash flow and balance sheets. I'll also add Cisco, and Intel, 2 more companies similarly positioned to win in the cloud and internet of things.
    18 Mar 2014, 05:48 PM Reply Like
  • markl74
    , contributor
    Comments (3) | Send Message
    Banmate6 - It sounds like you are making assumptions about what it is like for a company to use SaaS applications from multpile vendors, but you have never actually used it yourself. Please allow me to comment re your notes:
    - The integration story you mentioned is an old school scare tactic. The new world is about best-of-breed and open and extensible architecture that allows good integration between loosely coupled systems. There are many companies that use Salesforce CRM, Workday HCM, Netsuite financials, etc... Things work pretty well, and certainly work better than if you settled on a mediocre integrated solution from a single vendor. Have you actually used or seem Oracle's ebusiness suite? Or the Sales Fusion CRM product? And do you really think that Oracle's Marketing Cloud offerings (Eloqua and Responsys) integrate better with Oracle CRM than they do with Salesforce or IBM -- they actually integrate better with non-Oracle systems.


    Cost may be an issue when you have lots of employees, but then again, it may not. When you run on-prem you need to deal with backup, upgrades, support, etc... You also have capex. When you get a SaaS subscription it is all opex (aside from the initial setup/integration which you may capitalize) and someone else worries about backups and upgrades. You can also negotiate...


    Credential management is a non-issue for SaaS application as they all support Single Sign-on (SSO). In fact, a few SaaS SSO players have sprung up, such as Okta, OneLogin, PingIdentity to mention a few.


    Physics is an "issue" only when massive amounts of data have to move between the systems, which isn't usually the case. Think about what sort of data needs to move between your CRM, HRIS and ERP/Financials -- you'll quickly realize that there isn't that much data.


    Having said all this, Oracle is a great company and a cash cow. But the reality is that they are way behind on the Cloud transformation and are trying to reinvent their business via acquisitions. Will the strategy work? Maybe. Will their SaaS revenue ramp up quickly enough to deal with the on-prem decline? Maybe, but likely not.
    19 Mar 2014, 02:44 AM Reply Like
  • LeonCa
    , contributor
    Comment (1) | Send Message
    I partially agree with you, from the long run, silo vendors like salesforce and workday can't win the battle. But for the time being and within next a couple of or even several years, they should be still ok. As small to medium companies, they don't care about the integration, at least for the time being.


    At the same time, I don't have good outlook on Intel, for rest of them, I would think there could be one or two sink into the water while Amazon get a good chance to stand out.
    19 Mar 2014, 03:35 AM Reply Like
  • alpine
    , contributor
    Comments (2122) | Send Message
    @banmate6 and markl74


    While both your points of view are valid in my opinion, the following factors weigh significantly in favour of Oracle as:
    - my experience at implementing Oracle Apps at a biotech company and trying to work with a legacy SAP implementation at a mobile phone company convinced me many years ago that having your own database platform is a key competitive advantage, as it automatically enables or arguably, even "forces" integration between disparate manufacturing, technical, services and business/ accounting operations. In this regard, Oracle has no equal in SAP or any of the other new cloud focused vendors on the horizon;
    - it already has a large installed base of clients, all across the geographies, multiple key industries and all manner of sizes. This is true even if the bulk of them are, for want of a better description, legacy on-prem implementations;
    - almost singular among all its competitors, Oracle has acquired and nurtured, over some 10+ years, a whole variety of vertical, industry-specific applications that cater to front office, back office, technical as well as business and accounting operations, BI, and routine information reporting. As far as I know, Microsoft and IBM had a good chance to repeat this approach, but they failed to do so, at least not to the extent that Oracle has;
    - it is the conscious choice of many companies, even in these "cloudy" days, esp in key industries such as finance, pharmaceutical, government, or in certain "pathologically data security insecure" countries, to implement or continue with on-prem implementations, and in this regard, Oracle provides a real, sustainable option; and finally,
    - the most compelling argument as to how Oracle will manage to neutralise markl74's concern re:"The new world is about best-of-breed and open and extensible architecture that allows good integration between loosely coupled systems" is simply Oracle's track record of the past 15 years: almost against all odds, Oracle has leveraged its solid database foundation to extend deeper and wider than any IT software vendor, esp Microsoft, and even if its Fusion platform is hardly a platform today, it will evolve, slowly but surely, as Oracle's focus in this regard is not achieving integration as and end in itself, but only a means to its real end: to grow revenues, profitably, to keep its huge, profitable installed base, to leverage learnings from one client to all across the globe with clients in the same indutry, etc etc. Their street smartness is way ahead of just about anyone else in the industry, certainly IBM, Microsoft, HP, Dell, and the likes of Accenture, etc.


    My bet is that over the next 2 years, there are many tailwinds in Oracle's favour, including its highly advantageous tax structure, and its over reliance on European clients, just at a time when the USD has effectively collapsed vs EUR and GBP.
    19 Mar 2014, 06:07 AM Reply Like
  • jamesingram32
    , contributor
    Comments (579) | Send Message
    hey, mark, I agree on the best of breed poit, but it is old school as well! 15 years ago when i was at Oracle we were saying the same thing then. 'one throat to choke' etc. Why have BEA webserver when ours is better and part of the oracle stack. Why buy seible when our CRM is integrated into our 360% repository view and better, ditto why buy peoplesoft etc etc.


    and what did we do in the end? We got yet another ass kicking ex marine in ( Chuck Phillips) to buy all of the above mentioned!
    However, ORCL does have a bundle of cash, and a lot of very very clever techies who are totally dedicated to Oracle and although he is a maverick, and not a nice guy in any way, I wouldn't bet, in the long term, against L Ellison and his team.
    19 Mar 2014, 06:13 AM Reply Like
  • banmate6
    , contributor
    Comments (1550) | Send Message
    Let's just say I'm in the business of providing enterprise solutions across various industries, integrating on-premise, public, and private cloud computing. All the issues I delineated are very real, attested to by enteprise CIOs, DBAs, developers...and certainly what I am being challenged to solve in my work as a fairly low level software engineer for a vendor company.


    Sorry, but you're just parroting marketing points. I actually build the APIs & infrastructure to write integrated, so called big data operational analytics. Both SalesForce and WorkDay tout an analytic capabilities. Again, physics and the disparity of data models matters when building customized applications integrating . It's something that the traditional vendors are jumping on at a rapid clip...providing exactly what I discussed, using their considerable engineering bandwidth and application breadth, never mind possessing the entire cloud IAAS, PAAS, & SAAS stack.


    Lastly, what you said about Oracle vis-a-vis acquisitions can be said about SalesForce. Again, Oracle has the end to end IAAS and PAAS to create integrated SAAS applications. And money, as you acknowledge, with which to do this patiently. Contrast that to SalesForce offering a singular CRM concentration, losing money, but yet acquiring in order to get so called marketing functionality synergies.
    19 Mar 2014, 09:16 AM Reply Like
  • banmate6
    , contributor
    Comments (1550) | Send Message
    By the way, my response was to markl74.


    Anyway, check out today's price action. Consider how Oracle isn't really falling. It may or many not be indicative of something significant. But on initial glance, to me it looks like an affirmation of Oracle by the street.


    Like I said, the traditional players have just begun to fight. Oracle in has been in the process of restaffing and retuning its sales force to sell integrated cloud solutions for some time. As has been Microsoft, which is getting a boost with Satya as a cloud oriented CEO. IBM management is also now in a similar process, whilst SAP is already there.


    It should be an interesting year ahead. Full disclosure: I am long IBM, MSFT, INTC, and CSCO in this context.


    I'm keeping an eye on Oracle. I really should have pulled the trigger when they fell to around $30 this past year. It really was a no brainer, but I didn't follow my instincts on a company that was at fair current value and relatively cheap forward value.
    19 Mar 2014, 03:43 PM Reply Like
  • Phil64
    , contributor
    Comments (23) | Send Message
    Actually, I don't really agree with your arguments as the IT industry and data centers are looking at ways to reduce the extreme complexities in the datacenter and reduce OPEX costs, way more than reducing CAPEX costs which are already getting exceedingly low.


    Your statement that "the integration story you mentioned is an old school scare tactic" doesn't make any sense considering that more and more technology vendors, like Oracle, IBM, HP, Cisco, EMC are focused on providing more integrated, and in Oracles case, Engineered systems. IBM Pureflex, VCE VBlock, EMC Pivotal, HP Matrix, Oracle Exa / SuperCluster are all integrated solutions.


    Most analysts including IDC and Gartner says that integrated systems trend is on the rise. IDC expects "1/3rd of the market to move to Integrated Systems by 2016" (Ref: IDC Converged /Integrated Systems Survey, September 2012 ) while Gartner, suggests that “By 2015, 35 percent of total server shipped value will be as integrated systems.” (Gartner Data Center Conference presentation, “Will Fabric Computing Change the Concept of the Traditional Server?” December 2011.).


    So your statement "The new world is about best-of-breed and open and extensible architecture that allows good integration between loosely coupled systems" is actually old school and what the world of IT has been focused on these last 10+ years and has got them into their current complexity/OPEX mess. And in process, datacenters are now locked-in to this complexity and battling just to keep everything up and running.


    Sure, best of breed is still ideal, and so is supporting open standards, but today, the focus is on vendors delivering "best of breed" but in one integrated (end to end) solution (SW, Virtualization, OS, Server, Networking, Storage), eliminating a lot of the complexities most companies have in trying to get (multiple/various vendor best of breed) products working having to all work in unison across the Software and Hardware stack. But realize, most vendors don't actually have the IP/control/engineer the whole stack and that’s one of Oracles unique value propositions. It has both SW and HW engineers under one roof, all working and focused to deliver a singular integrated solution. Would you trust a different vendor to provide better E-Business Suite, Oracle DB, Fusion CRM, etc integration/testing/en... with the HW layers of the stack than Oracle?


    Gartner, a few years ago, researched IT budgets across many of the Fortune 1000 and discovered that roughly 70% is associated to OPEX costs, and only ~22% is for HW/SW acquisitions and at same time, IDC discovered that while CAPEX has been flat, to slightly declining these last 10 years, OPEX costs have skyrocketed, especially from around 2005.


    So today, the best way to reduce IT OPEX costs, is to buy as much "integration" of products from a single/one vendor, who's already done all the testing, validation, integration, optimizations and will support/manage the entire stack, over the lifecyle. The phone industry, especially Apple, and Samsung is a perfect example of a completely integrated and optimized end to end solution. And with Oracles Engineered systems, time to deployments are significantly shorter, with one management SW tool is all that’s needed to manage everything, and for patching/updating, a single patch, provided 1-2x per year, patches entire stack, just like iPhone updates. The days of IT datacenters doing configuration, patching, complex multi-vendor platform administration, product integration and lifecycle management nightmares are numbered. And the best part is Oracle is the leader today in Engineered/Integrated Systems with over 400,000 customers already running Oracle SW to focus on.
    20 Mar 2014, 10:04 AM Reply Like
  • banmate6
    , contributor
    Comments (1550) | Send Message


    I suspect that given 3 posts of history, our friend is in sales or marketing and advocating his interests.




    I agree with most of your last post. I think a lot of folks still don't get the nuances of on-premise, private cloud, and public cloud computing, especially vis-a-vis the underlying maintenance. Increasingly there's not much of a difference.


    I know one thing: my investments in IBM, CSCO, INTC, and MSFT are solid. I'm itching to get into ORCL, but I keep missing the boat. I foolishly didn't get in a few months ago, when it was $30 a share, in spite of all myt value investing instincts screaming: buy buy buy!


    I'll repeat what I've been saying for months on SA: the traditional vendors have finally trained their guns and are firing at full salvo. Their arsenals of R&D, channel, money, profits, and integration across the IAAS, PAAS, & SAAS stack dwarfs that of SalesForce, WorkDay, Concur, ServiceNow, and other pure SAAS companies.


    Larry Ellison is a maverick. I might be wrong, but something tells me when the smoke clears, Oracle will be proudly standing as the type of dominant IT company it has been for several decades now. I can't say the same for the aforementioned SAAS companies.
    20 Mar 2014, 04:22 PM Reply Like
  • Phil64
    , contributor
    Comments (23) | Send Message
    @ banmate6


    check my profile ;-). Plus that, Ive been in the Tech industry now 25+ years.


    Whats important to point out, is that usually every ten years or so, companies reinvent themselves to survive and thrive or die. So while Intel, HP, IBM are still struggling to figure out their new identities, Oracle is way ahead of the game, and clearly delivering "new tech". And so theres distinction between ‘old tech’ companies and ‘new tech’ companies. You've clearly bet on what I consider to be the major ‘old tech’ companies, namely Intel, Cisco, HP and IBM, all of which have been reporting negative revenue growth for last 2+ years.


    While Oracle, I consider to now be a ‘new tech’ company with many recent HW (and cloud) related acquisitions including Sun Microsystems, that have allowed Oracle to deliver new solutions based on integrating hardware, software, and services with a focus on new ways of delivering customer solutions. The fact that Oracle is taking HW market share from the two leaders in HW, HP and IBM is further evidence that Oracle is on the right track and if you look at the latest reports from most analysts (industry and finance), many are now stating the same. Watch this space.
    21 Mar 2014, 11:18 AM Reply Like
  • banmate6
    , contributor
    Comments (1550) | Send Message


    I'm confident the other traditional tech will right the ship, much as Oracle is doing. As I said, my investments in IBM, INTC, CSCO, and MSFT are doing very well. For me, it's all about buying good companies at value...which is why I regret not taking the opportunity a few months ago with Oracle.


    I simply consider how Oracle technology underpins SalesForce. Millions of lines of PL-SQL drive SalesForce CRM in Oracle databases. The whole notion of SAAS multi-tenancy with SalesForce is facilitated by customers sharing the same Oracle database tables, delineated by GUID.


    Lastly, I obviously don't believe it is a zero sum game between the likes of IBM, ORCL, SAP, and MSFT. Especially given how cloud computing is evolving. They're all going to be long term winners, as are INTC and CSCO in their spaces.


    All the best.
    21 Mar 2014, 11:26 AM Reply Like
  • PlatinumChip
    , contributor
    Comments (104) | Send Message
    The tech game is a marathon not a sprint.
    18 Mar 2014, 06:34 PM Reply Like
  • Randal James
    , contributor
    Comments (4420) | Send Message
    That's what the guy in back usually says.
    19 Mar 2014, 03:33 AM Reply Like
  • dad58
    , contributor
    Comments (107) | Send Message
    The only reason Oracle is able to make money is to buy other companies. Internally it is a hollow shell of zero innovation.
    19 Mar 2014, 12:31 AM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13546) | Send Message
    They also make money feasting on the liquid assets of Salesforce. Salesforce will never be cash flow positive and only survives on the Ponzi like scheme of hiding employee costs via stock dilution.
    19 Mar 2014, 05:45 AM Reply Like
  • jamesingram32
    , contributor
    Comments (579) | Send Message
    and their competition sell software that runs on Oracle database....even though they have tried to do differently, To compete with the DB would require a rebuild from scratch for the competition.
    THAT, plus the install base, is a HUGE moat
    19 Mar 2014, 06:15 AM Reply Like
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