Dec. 4, 2014, 7:04 PM
- With a corporate upgrade cycle and Web/cloud demand boosting sales, IDC estimates global server revenue rose 4.8% Y/Y in Q3 to $12.7B, an improvement from Q2's 2.5% growth and Q1's 2.2% decline. Gartner is more conservative, estimating revenue only rose 1.7%.
- "IDC has seen increasing market influence from Greater China, hyperscale datacenters, ODMs and native Chinese OEMs, all of which grew sharply in the third quarter," says VP Matt Eastwood. Like others, IDC expects Intel's recent Grantley Xeon CPU launch, together with the pending end of Windows Server 2003 support, to keep demand healthy.
- Thanks to weak demand for its high-end, Itanium-based, Integrity servers, market leader H-P's (NYSE:HPQ) share fell 140 bps Y/Y to 26.5%, after having risen 40 bps in Q2. H-P just rolled out Integrity servers running (x86-based) Intel Xeon CPUs in an attempt to stop the bleeding.
- #2 IBM's share fell 500 bps to 18.2%, thanks to both high-end (mainframe/Power) and x86 weakness. The sale of IBM's x86 server unit to Lenovo closed early in Q4. #3 Dell's share rose 80 bps to 17.8%.
- Cisco (NASDAQ:CSCO) passed Oracle (NYSE:ORCL) to take the #4 slot: Cisco's share rose 130 bps to 6.2% on the back of 31% revenue growth, while Oracle's was flat at 4.1% (3.4% revenue growth). Today, Cisco and IBM announced a converged hardware solution that pairs the former's UCS servers with the latter's Storwize storage arrays.
- As expected, white-label servers sold to Internet giants (called ODM Direct by IDC) continued gaining ground: Their share rose 250 bps to 8.9%. Everyone else saw their share collectively rise 210 bps to 18.4%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Nov. 24, 2014, 3:43 PM
- Twenty-two spinoffs have been completed in 2014, the most in a decade, and another 28 have been announced. Among the catalysts are activist investors, so Credit Suisse screened for companies with multiple business segments, slow growth, and stocks trading for lower multiples than peers, in other words, "good, quality companies that are struggling to grow."
- The list is heavy on big media names like Time Warner (NYSE:TWX) and Twenty-First Century Fox (NASDAQ:FOXA), big tech like Oracle (NYSE:ORCL), Symantec (NASDAQ:SYMC), and IBM, and big industry like Lockheed Martin (NYSE:LMT), Ingersoll-Rand (NYSE:IR), and Raytheon (NYSE:RTN), but just two financial names - Travelers (NYSE:TRV) and Torchmark (NYSE:TMK).
- The rest: MO, CA, WU, DPS, PBI, SJM, HRS, SWK, EMR, WLP, MAT, GE, SNA, LLL, ITW, STJ, PDCO, HPQ, DLPH, HAS, NAVI, GME, CBS, JNJ, SLB.
Nov. 14, 2014, 2:43 AM
- SAP (NYSE:SAP) has agreed to pay Oracle (NYSE:ORCL) $359M to settle a long-running legal battle over software copyrights.
- Oracle filed suit in 2007 alleging that TomorrowNow, a company that SAP had acquired, illegally downloaded Oracle’s software.
- SAP admitted liability, but the lawsuit dragged on for years over the amount of damages the company should pay.
Nov. 12, 2014, 5:55 PM
- At its annual AWS re:Invent conference, Amazon (NASDAQ:AMZN) has launched Aurora, a database solution for AWS clients that the company claims delivers "commercial-grade" performance and reliability (99.99% uptime is claimed) at "1/10 the cost of the leading commercial database solutions."
- Among those solutions, none looms larger than Oracle's (NYSE:ORCL) core database offerings, which (in spite of tough competition from Microsoft and others) maintains an outsized enterprise share.
- As it is, Oracle's database sales have been pressured by a secular migration towards cloud apps, many of which rely on MySQL and other non-Oracle databases. For a price, AWS supports Oracle's flagship 12c database, as well as several rival products.
- Amazon has also launched: 1) Key Management Service, a solution that lets enterprises manage encryption keys for both on-premise and cloud apps/services. 2) CodeDeploy, a solution for quickly having new code go live on multiple AWS computing instances. 3) CodeCommit, a cloud-based tool for managing code revisions. 4) CodePipeline, a service that automates software releases.
- What hasn't been announced yet is a new round of price cuts to counter the ones Google unveiled last week. After Amazon quickly matched a round of Google cuts in March, AWS' main reporting segment saw an unexpected Q/Q revenue drop in Q2; sales rebounded in Q3.
- AWS chief Andy Jassy says his unit now has 1M+ business and government clients, and reiterates its long-term vision. "The vast majority of companies will not own their own data centers in the fullness of time ... All that computing is moving to the cloud. This space is going to be a high-volume, relatively low-margin business."
- Previous: AWS still dominant; Microsoft, Google gaining ground
Nov. 8, 2014, 2:04 PM
- 54% of voting shareholders rejected Oracle's (NYSE:ORCL) proposed executive compensation package, down from 56% rejection last year and 59% in 2012. Oracle disclosed the results Friday in a filing. The vote was held at its annual stockholder meeting earlier this week.
- The vote, required since 2011 under Dodd-Frank, is symbolic, but is seen as a gauge of shareholder sentiment about a company and its corporate governance.
- Oracle is one of a handful of companies where say-on-pay votes have failed three times in a row.
- Sources: 8-K, WSJ, Oracle's investor presentation on executive comp.
Oct. 22, 2014, 1:22 PM
- Enterprise software vendors are having a rough day after VMware (VMW -5.6%) provided light Q4 guidance to go with a Q3 beat.
- On its CC (transcript), VMware also reported its bookings fell Q/Q in Q3. They were hurt by Russian and German softness, and a failure to close a major enterprise license agreement (ELA) with a federal client. ELAs made up 29% of Q3 bookings, down from 37% in Q2.
- Rivals Oracle (ORCL -1.5%), Red Hat (RHT -3.3%), and Citrix (CTXS -1.5%) are among the decliners, as are Splunk (SPLK -4.7%), Tableau (DATA -2.8%), Qlik (QLIK -2.5%), and MicroStrategy (MSTR -0.9%). Oracle provided light guidance last month.
- Several enterprise cloud software stocks are also selling off: N -2.5%. VEEV -2.9%. ZEN -4.2%. CSOD -2.3%. SAAS -3.2%. NOW -1.7%.
- Nomura and Raymond James have downgraded VMware. Nomura thinks 2015 guidance (expected in January) will also be light, and believes slow vSphere server virtualization growth (affected by competition and high penetration rates) will remain a headwind, given it's still over half of VMware's business. "Growth has to come from the vCloud Suite ... other newer products are just too small still to matter."
- Some of those "other newer products" are doing well: VMware's end-user computing license bookings (boosted by the AirWatch acquisition) rose over 60% Y/Y in Q3, and its much-hyped NSX software-defined networking platform now has 250+ paying customers (up from just 100 a few months ago).
- A slew of enterprise tech names sold off on Monday in response to IBM's Q3 report. Big Blue's software sales fell 2% Y/Y in Q3, after rising 1% in Q2. CA, Citrix, and ServiceNow report after the bell.
Oct. 20, 2014, 9:19 AM
- IBM missed Q3 estimates, pulled its $20 2015 EPS forecast, and respectively reported 15% and 7% Y/Y drops in hardware revenue and services backlog.
- Big Blue also stated it "saw a marked slowdown in September in client buying behavior," and declared its numbers "also point to the unprecedented pace of change in our industry" (at least partially a reference to cloud services adoption).
- SAP missed Q3 revenue estimates (while posting in-line EPS), reported a 3% Y/Y drop in traditional software license revenue, and (citing the cloud transition) cut its full-year op. profit outlook.
- Microsoft (NASDAQ:MSFT) -0.8% premarket. H-P (NYSE:HPQ) -2% premarket. Oracle (NYSE:ORCL) -1.8%. EMC -0.8%. There's a good chance other enterprise IT names will trade lower as well.
Oct. 1, 2014, 10:20 AM
- New Oracle (ORCL -0.3%) co-CEO Safra Catz: "We’re No. 1 in database, we’re No. 1 in middleware, but we’re No. 2 in applications ... At Oracle, silver medal is first loser."
- Catz's remarks come two weeks after SAP (presumably the company deemed #1 in apps) agreed to pay $8.3B to buy leading cloud travel/expense management software vendor Concur Technologies. Plenty of cloud software stocks rallied in response, as investors bet the deal would trigger fresh M&A activity in an industry that has already seen plenty.
- They also come two weeks after Oracle reported light software license growth amid slumping database sales and intense cloud competition.
- Oracle has already bought a long list of enterprise software firms in recent years. Major cloud-related purchases include marketing automation software vendors Eloqua and Responsys, customer support software firm RightNow, talent management software firm Taleo, and sales quote software provider BigMachines.
- More recently, Oracle paid $5.3B to buy point-of-sale hardware/software firm Micros. Thanks to its M&A binge and huge buybacks, Oracle had $32.6B in debt as of Aug. 31 to go with $51.6B in cash/investments.
- Yesterday: Oracle launches flurry of new products
Sep. 30, 2014, 2:48 PM
- Oracle's (ORCL -0.2%) PR department has been in overdrive as the company's annual OpenWorld conference progresses. More than a dozen hardware, software, and cloud services offerings have been launched or refreshed.
- Hardware launches include: 1) The FS1, a hybrid flash/disk storage system featuring software that tries to optimize price/performance through "fine-grain autotiering" of storage types. It faces competition from EMC, NetApp, H-P, and many others. 2) A new Exalytics In-Memory Machine (competes against systems running SAP's Hana) that delivers large performance/memory improvements. 3) A database recovery appliance said to deliver "zero data loss protection" for live databases.
- Software launches include: 1) Updates to Oracle's cloud ERP, HR, and CRM apps. The HR apps (face competition from Workday and SAP) have been given design changes meant to appeal to casual users, and the CRM apps now integrate BlueKai's data management platform. 2) New features for Oracle's Fusion middleware meant to improve data integration for cloud services and mobile apps. 3) A new release for the open-source MySQL database (has been losing ground to MariaDB).
- Cloud services launches include: 1) 6 new services for Oracle's cloud app platform (playing catch-up against Microsoft and Salesforce). 2) A Business Intelligence Cloud Service that joins Oracle's Analytics Cloud portfolio. 3) Mobile app development services meant to allow non-technical users to build apps.
- Oracle is counting on the launches to put a halt to its recent top-line struggles, caused in large part by soft hardware and database sales.
Sep. 24, 2014, 2:33 PM
- John Chambers has dismissed speculation Cisco (CSCO +1.3%) could make a bid for EMC (EMC -1.1%). "If [EMC CEO Joe Tucci] and I were going to do something here, we would have done it a year or two ago."
- Likely an issue today: A Cisco deal would raise antitrust issues in the network virtualization/SDN software space, where VMware (VMW -0.3%) and Cisco have emerged as the early leaders. Also, Cisco's storage networking unit relies on OEM deals with EMC rivals (in addition to EMC).
- Meanwhile, re/code reports Oracle (ORCL +1.5%), another company whose name was thrown around in EMC deal speculation, is also uninterested.
- Recent reports stated EMC has held merger talks with H-P, but failed to agree (for now, anyway) on a price. Sources (possibly hoping to drum up M&A interest in EMC) added a deal with Cisco or Oracle was also possible. Re/code backs up the part about the H-P talks, while adding H-P was largely interested in owning VMware VMW via EMC.
- Many on the Street still think EMC will make a deal before Tucci's planned Feb. 2015 retirement. Tucci hasn't named a successor yet; Argus' Jim Kelleher consider ex-CFO David Goulden, now the head of EMC's storage hardware/software unit, to be the favorite. VMware CEO Pat Gelsinger and Pivotal CEO Paul Maritz are also in the running.
Sep. 24, 2014, 2:03 AM
- Oracle's (NYSE:ORCL) new co-CEOs Safra Catz and Mark Hurd will receive a one-time option to purchase 500K shares of Oracle apiece, while outgoing chief exec Larry Ellison, will receive 750K fewer shares for the 2015 fiscal year.
- The new top execs also qualify for performance-based bonuses of 125K shares each, on top of the 562.5K shares of performance-based stock granted to them both in July.
- However, the company is slashing its long-term exec compensation program, lowering Catz and Hurd's total stock options to 2.75M a piece from 5M a year earlier.
Sep. 19, 2014, 4:54 PM
- Though Oracle's (ORCL -4%) cloud-related sales saw healthy growth in FQ1, its core database business saw negative license growth, notes Deutsche's Karl Keirstead, downgrading shares to Hold. "Coupled with Larry Ellison’s decision to give up the CEO role, our confidence in the core database business is getting tested and we’d prefer to step to the sidelines while Oracle shares are still near their 10-year high."
- While Oracle blames the database weakness on tough comps and sales execution - the latter is a common excuse among enterprise software firms - Keirstead also sees other factors at work: A mature relational database market; Microsoft's share gains; and a secular shift to new data types (e.g. Hadoop/NoSQL) and cloud apps (often running on non-Oracle databases). He estimates Oracle's FQ2 guidance implies a 3%-4% Y/Y drop in license revenue.
- D.A. Davidson (Neutral) also isn't thrilled with Oracle's numbers. "ORCL's financial results have now either missed or come in at the low end of management's guidance range in 7 of the last 9 quarters." Ditto Sterne Agee: "Given the current moderate size of the cloud business, the transition will span several years and create both revenue and EPS estimate volatility."
- On the other hand, Sterne (like many others) isn't concerned about Oracle's CEO change, calling it "more of a change in titles than in functions." On the CC (transcript), new co-CEOs Safra Catz and Mark Hurd insisted there will be no major operational changes.
- Wedbush, however, sees negative long-term implications. "Mr. Ellison's desire to delegate more responsibility (and credit) to Safra Catz and Mark Hurd is understandable ... but it underlines our view that Oracle's days as an organic grower are rapidly coming to an end."
- Prior Oracle coverage
Sep. 18, 2014, 5:40 PM
- Oracle (NYSE:ORCL) guides on its FQ1 CC for FQ2 Y/Y revenue growth of 0%-4%, and EPS of $0.66-$0.70. That's below a consensus for 4.8% growth and EPS of $0.74.
- Software/cloud revenue is expected to grow 3%-6% Y/Y vs. 6% in FQ1, and hardware revenue is expected to be flat to down 10%. SaaS/PaaS revenue is expected to grow 39%-44%, and IaaS revenue 40%-44%.
- Oracle largely blames the near-term weakness on a transition to cloud subscriptions from up-front licenses, though it also admits execution issues are hurting hardware and services sales. Micros is expected to provide a slight boost to FQ2 results.
- Shares -2.3% AH.
- Prior Oracle coverage.
Sep. 18, 2014, 4:29 PM
- Oracle (NYSE:ORCL) has added $13B to its buyback plan; that's good for repurchasing 7% of shares at current levels. As it is, $2B was spent on buybacks in each of the last three quarters.
- Software and cloud revenue (76% of total revenue) rose 6% Y/Y in FQ1 to $6.6B, hitting the low end of guidance for 6%-8% growth. However, new software license revenue (pressured by cloud competition) fell 2% to $1.37B.
- License update/product support revenue (fairly stable) rose 7% to $4.7B. Cloud app (SaaS) and app platform (PaaS) revenue rose 32% to $337M, towards the high end of guidance for 25%-35% growth. Cloud infrastructure (IaaS) revenue grew 26% to $138M, topping guidance for 10%-20% growth.
- Hardware revenue (hurt by UNIX server declines) remains weak, falling 8% to $1.17B; that's soundly below guidance for -1% to +3% growth. Hardware products -14%, support -1%. Services revenue -7% to $855M.
- GAAP opex +2% to $5.6B; sales/marketing spend +5% to $1.71B, R&D +7% to $1.32B.
- Shares -2.3% AH. CC at 5PM ET, guidance will be provided.
- FQ1 results, CEO news, PR
Sep. 18, 2014, 4:11 PM
- Along with its FQ1 results, Oracle (NYSE:ORCL) announces Larry Ellison is resigning as CEO. President/ex-H-P CEO Mark Hurd and CFO Safra Catz will act as co-CEOs going forward.
- Ellison, 69, is taking over the role of chairman from Jeff Henley, who has held it for 10 years, and has also been named CTO. Henley is now vice chairman.
- Sales, service, and "vertical industry global business units" will report to Hurd. Manufacturing, finance, and legal teams will report to Katz. Software and hardware engineering teams will continue reporting to Ellison.
- Director Michael Boskin: "Larry has made it very clear that he wants to keep working full time and focus his energy on product engineering, technology development and strategy."
- Shares -2.7% AH following the news and Oracle's FQ1 miss.
Sep. 18, 2014, 4:03 PM
ORCL vs. ETF Alternatives
Oracle Corporation develops, manufactures, markets, hosts and supports database and middleware software, application software, cloud infrastructure, hardware system including computer server, storage and networking products and related services.
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