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  • Might Be Riskier Than It Seems [View article]
    I was thinking the same thing. Oracle knows CRM is overvalued and will take a pass just like it did with Autonomy which has been nothing but a nightmare for HP who overpaid for it. When the shoes all drop and CRM's valuation reflects reality, then Oracle will think of swooping in. In fact I think that's been Benioff's endgame from the start--getting bought out by Ellison, his old boss, I mean (not having the stock implode)..
    Oct 17, 2013. 10:51 AM | Likes Like |Link to Comment
  • Might Be Riskier Than It Seems [View article]
    " The reason for Chapter 11 is the result of senior management making too many deals at low or no margin, not because of the Salesforce software. "

    How ironic, 'too many deals at low or no margin' seems to be exactly what Salesforce is doing....
    Oct 17, 2013. 10:44 AM | 1 Like Like |Link to Comment
  • Might Be Riskier Than It Seems [View article]
    But 'loss leaders' are supposed to bring in customers to buy products with higher margins, so the company using the loss leader strategy ends up making more money than it would've otherwise. Salesforce is losing money, so if that's the strategy, it sure isn't working.
    Oct 17, 2013. 10:42 AM | 1 Like Like |Link to Comment
  • Might Be Riskier Than It Seems [View article]
    And why do they have to give the product away by selling it below cost?
    Oct 16, 2013. 11:11 AM | Likes Like |Link to Comment
  • Might Be Riskier Than It Seems [View article]
    Do you understand the difference between producing a product and running a business?

    In this 'thread' I said I don't doubt that has a real product and real customers--but what it doesn't have is profitability. It is, in essence, giving its product away below cost. That is a totally separate issue from the product itself.

    We are not here to talk about the merits of its products, but the viability of its business model and its appeal, or lack thereof, as an investment.
    Oct 16, 2013. 11:10 AM | 2 Likes Like |Link to Comment
  • Might Be Riskier Than It Seems [View article]
    I agree--with 'marketing' comprising over 50% of revenues there should be more granularity regarding the line item. Given its importance in terms of operating costs, I wonder why no analyst has asked for more color regarding it during any of the earnings cc's. Unless we have the breakdown we can only speculate as to what is in the marketing black box.
    Oct 16, 2013. 11:00 AM | 2 Likes Like |Link to Comment
  • Might Be Riskier Than It Seems [View article]
    I guess we'll just have to take their word for it then....
    Oct 15, 2013. 11:29 AM | 2 Likes Like |Link to Comment
  • Might Be Riskier Than It Seems [View article]
    I was watching the segment with Jim Chanos as co-host on CNBC live when he mentioned he was long Workday and short another 'fun' cloud company to offset the long position. When asked which one, he declined to name it, calling it only an accounting nightmare.

    Here is the link to the video where he makes this statement:

    As soon as I heard the 'fun' and 'accounting nightmare' my immediate thoughts went to I could be wrong, but that was my gut reaction. We've been calling them out on their fictional non-gaap results for some time.

    Personally, aside from the insistence on backing out stock-based compensation from expenses, I have had major doubts about the 'marketing' expenditure line item and want to know if it entail rebates, discounts, and other purchase incentives that should be deducted from revenues instead of being parked in the 'operating expense' section of the income statement. Of course, that would mean that revenues aren't growing as fast as Salesforce claims and that the 'growth-story' is just that--a 'story'--as in 'fiction. '

    I don't doubt the company has real customers and a real product, but I think it uses accounting gimmicks to obfuscate the true condition of its underlying business operations. I also believe their model is relatively easy to replicate. So more competition means lower prices, lower market share, and a definitive end to the growth stage aspect of this company which is the reason for its elevated stock price.

    All of this is JMO. But the numbers don't lie--that is the real (i.e., GAAP) numbers--the company is losing money, not making it. And this is company has been profitable in the past. Why is that no longer the case? Because they need to give away the product below cost to get the sale? That is not a sustainable business model. And that is NOT jmo.
    Oct 14, 2013. 01:39 PM | 5 Likes Like |Link to Comment
  • Oracle: When Sometimes Bad Is Good [View article]
    Thanks for the article. Despite it causing Ellison to miss both the earnings CC and his own keynote at Oracle Open World, winning the America's Cup can't exactly hurt Oracle's brand.

    The flagging hardware product sales continue to be a drag on revenue growth rates, but that is largely due to the divesting of the low-margin products acquired from Sun. In the latest cc, it was noted that the higher margin part of the HW business like exalytics experienced growth in excess of 100%. So the HW issue should be self-correcting.

    The other bright spot is the new alliances with Dell, Salesforce and Microsoft. Another article published recently at SeekingAlpha indicated that the Oracle's will now have better reach into the SMB segment thanks to the Dell partnership. So that's another potential source of revenue increase.

    I might point out these new alliances mark, IMO, a change in strategy for Oracle who has in the past simply acquired the companies needed to expand sales opportunities. This new direction is certainly cheaper and less risky.
    Sep 30, 2013. 11:26 AM | 1 Like Like |Link to Comment
  • Why Oracle May Be A Great Stock, But Maybe Not Right Now [View article]
    Interesting point about the Dell partnership--it expands Oracle's SMB presence. I agree about the investment in Oracle's stock being 'meh' in the short term. It's pretty much dead money--safe money (in that it doesn't fall very fall even given disappointing news--for example the poor guidance given in the last cc barely registered in the stock price)--but still dead money for now. And likely for the next several quarters until it proves that it can grow the top-line, reach an inflection point in hardware sales (specifically the product sales), and do so in a regular fashion again.

    I find it quite interesting from a strategic viewpoint that the new strategy is not "buy 'em" but "partner with 'em" A far less costly and risky approach.

    I do beg to differ about Oracle not coming to the Cloud until recently. They had a 'cloud' offering for the past decade--called 'On Demand'
    Sep 30, 2013. 08:55 AM | Likes Like |Link to Comment
  • The Larry Ellison Compensation Hoopla Is Overblown [View article]
    Well, the options grants already have a 4 year vesting period (and this is typical in most cases). So that reduces a good deal of the short-termism to which you're referring, don't you think?

    Additionally since Ellison has a salary of $1 with the bulk of his compensation in the form of options ( in past years PFP bonuses as well however the execs declined them this year and that I assume will set a precedent for future periods as well), the cash-out date is always extended by 4 yrs so there is always at least a 4 yr out horizon.

    Besides, there is ego involved as well--what corporate exec wants to head a losing company (except Marc Benioff of course whose has been running operating losses for years).
    Sep 28, 2013. 11:52 AM | Likes Like |Link to Comment
  • The Larry Ellison Compensation Hoopla Is Overblown [View article]
    I think it should be noted that the headline-grabbing $76.9M is misleading in that:

    1. The $76.9M is not a cash payout as some who don't actually read the fine print might assume

    2. The $76.9 represents the fair value of Mr. Ellison's option grant (option to buy 7M shares at an exercise price of $29.72) as calculated under the Black Scholes options valuation model, which is questionable in its ability to reflect options which have a vesting period and are not transferable nor freely tradeable in the market.

    If you look at the compensation table, the portion of the options grant which vested over the past year has an intrinsic value to Ellison of $2.6M (given that the stock price as of May 31, 2013 was $33.78 and the vesting period is 4 years).

    As we know, if the stock sinks below the strike price of $29.72, Ellison and the rest of the execs who received stock options as compensation will be underwater.

    (And FYI Oracle does not allow the repricing of those options as some companies do should they become underwater).

    So it's hardly the same as the company handing a check over to Ellison for $77M which is what many of the financial press headlines imply.

    Btw, Ellison and the rest of the execs declined their PFP bonuses this year because " Oracle’s own internal growth expectations" were not met.
    Sep 27, 2013. 02:31 PM | 3 Likes Like |Link to Comment
  • Oracle - Same Story: Lack Of Revenue Growth Remains The Issue [View article]
    Adding to the above comments--it's easy to get the sale when you're willing to give the product away for free--which is something has been doing for the past 11 consecutive qtrs given that they are willing to incur ongoing operating losses for years despite being profitable once. Workday is another example of losing money--look at the 10-K filed, it's been losing money every year without exception since 2008 and still continues to do so.

    As far as cloud--Oracle's total new SW licenses and cloud subscriptions were up 7% in constant currency this qtr. That is in spite of the lagging growth rate in GDP--not a fact that should easily be dismissed.

    As far as HW--yes PRODUCTS remain a disappointing drag, but HW support was up 5% in constant currency. And the strategy was to get rid of the low margin HW products and replace those lost sales with higher margin exa products--afterall this is about making money, which Oracle has been doing.

    The sad reality is that The Street has come to expect disappointing revenues from Oracle--as is witnessed by the lack of a sell-off today (the stock actually closed up). Hopefully they will overcome whatever issues they are having in meeting top-line expectations. But the ball is in Oracle's court to prove to investors it can have better top-line performance. It's taking longer than anyone expected--including management, I think.
    Sep 19, 2013. 04:33 PM | Likes Like |Link to Comment
  • Prominent Hedge Fund Analyst Makes Bearish Call On Oracle's Earnings Report [View article]
    I agree that Oracle has had a recent track record of disappointing investors, but the alarmist headline about the 'prominent hedge fund analyst' is misleading to put it mildly. The 'analyst' doesn't have a name, merely a username.

    When I clicked on this article, I expected to see a well-known Wall Street Hedgefund make a pre-earnings call with reasons to back it up, such as 'channel checks' or 'weakness in Europe' or 'a large deal that didn't close', etc. But instead I got no reason for the bearishness and neither the name of an analyst nor the name of the hedgefund.

    So I will take this 'bearish call' with a grain of salt.
    Sep 17, 2013. 03:58 PM | 4 Likes Like |Link to Comment
  • Aggressive Accounting And Public Relations Remain A Worry [View article]
    I think it's an estimate of potential future taxes based on mgmt assumptions which are 'subject to change'

    "The deferred tax liability established was primarily a result of the difference in the book basis and tax basis related to the identifiable intangible assets. The preliminary estimated fair values of assets acquired and liabilities assumed, including current and noncurrent income taxes payable and deferred taxes, and identifiable intangible assets may be subject to change as additional information is received and certain tax returns are finalized. "

    Honestly, the analysts should've asked about it in the CC since it had such a large impact on reported net income.
    Sep 12, 2013. 07:18 PM | Likes Like |Link to Comment