Don’t Blame It On The Cloud
Oracle reported its Q3 profit increased by 18% as new licensing revenue helped offset weak hardware sales.
Earnings came in at $0.62 per share on revenue of $9.04 billion while analysts were expecting $0.56 on $9.02 billion.
Hardware revenues missed by 1% while software revenues came in about 1% to the upside and that lower taxes added about $0.04 to the bottom line.
The company, which had at one point dismissed cloud computing, also announced that it would launch its Oracle cloud service in Q4.
CEO Larry Ellison said, “We named our cloud the Oracle Secure Cloud because we believe that we’ve addressed our customers’ most serious concern about cloud computing, namely security.”
Market Performer ?
On the back of the results, Oracle is not growing particularly rapidly, and despite an extended discussion to the contrary the firm is facing a tougher group of competitors. This realization probably accounts for the stock’s underperformance versus the market on 12- and six-month periods and a market performer post the December 20 earnings miss.
Oracle has survived difficult periods in the past (1990 cash crunch and 2001 IT spending meltdown). The firm knows how to pivot. Oracle, however, is not ahead of its competitors in software architecture or business momentum in his opinion. Could this change? Of course, – but Oracle is playing catch up for now. We may become more constructive if the firm gains momentum with its integrated hardware stack or its cloud software effort.
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