Oracle Talks Cloud While Buying Applications

Dana Blankenhorn profile picture
Dana Blankenhorn
6.18K Followers

One of the harsh truths of the cloud market is that it's mostly off in the future. Today, enterprises are buying virtualization that improves the efficiency of data centers and applications that make use of their data stores.

So while Oracle (NYSE:ORCL) has been talking itself up as a cloud company, in the real world it is devoted to vertical enterprise applications. The purchase of DataRaker, which does data analysis for utility companies, is in keeping with this strategy.

What's the difference between virtualization-with-big-data and cloud? The former is based on existing hardware resources, the latter is a completely new model. The first delivers what the latter claims to. The first lives in the real world, and the latter is an evolution. The first, in short, makes money now and the latter may make money later.

Oracle wants to make money now.

And it is making money now. Despite all the talk (including my own) about Oracle being doomed, dooo-o-o-omed, in the cloud era, the company's results remain strong. The stock is up almost 35% this year, and then there's the 18 cent/share dividend, which will go nowhere but up. Despite having the boat anchor of the old Sun Microsystems hardware business stuck to it, and despite being unable to monetize that company's open source software, Oracle is still bringing one dollar in four to the bottom line, and year-over-year revenues are fairly stable.

What's happening is that old technology is gradually being written down, new enterprise apps are being milked for all the cash they can deliver, and the company is being slowly re-engineered. It doesn't look gorgeous, but compare it with what's happening at rivals Dell (DELL) or HP (HPQ) and it begins to look very sweet indeed. Plus, with COO Mark Hurd ready to take over from aging CEO Larry Ellison whenever he says the word, they have leadership visibility.

Small wonder that the average recommendation of 44 analysts for Oracle is overweight. Expect a gradual move out of stocks like Microsoft (MSFT) to continue over the next year, as Oracle becomes the lead technology stock for conservative investors.

Oracle may indeed be doomed, dooo-o-o-omed, one day. But it is not this day. And for many investors, that's good enough.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article was written by

Dana Blankenhorn profile picture
6.18K Followers
Dana Blankenhorn http://www.danablankenhorn.com has been a business journalist since 1978, and a futurist all his life.He warned about the coming Houston oil collapse in 1979. He began making a living on the Internet in 1985. He launched the first e-commerce daily for CMP in 1994, warned of the coming dot-bomb at a-clue.com in 1997 and began covering the Internet of Things in 2003.Along the way he's written for a host of newspapers, magazines, news services and Web sites. Most recently he was at TheStreet.com, covering technology and investments. He still has time for freelance assignments. He lives in Atlanta.

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