Larry Ellison needs to rewrite Oracle's code
The software giant's second straight earnings disappointment shows its underlying problems aren't merely pesky bugs.
Earnings rose to $3.81 billion, or 80 cents a share, up from $3.45 billion, or 69 cents a share, a year earlier. Revenue gained 0.3% to $10.95 billion. Excluding one-time items, profit was 87 cents per share. That profit matched analysts' estimates of 87 cents, but fell short of the $11.1 billion in revenue they were expecting. And Oracle's guidance for the current quarter was lackluster.
It also announced plans to switch its stock listing to the New York Stock Exchange from Nasdaq. But that has nothing to do with the stock's dive.
Rather, Ellison's problem in a nutshell is that businesses are finding an economical alternative to Oracle's bread-and-butter offerings. Many customers now prefer buying access to software that runs on someone else's network, also known as cloud computing, instead of installing on their own systems the large database and human resource applications that Oracle and others sell.
While Ellison has been acquiring cloud-computing companies to regain footing in the marketplace, this hasn't given Oracle's bottom line enough of a boost to satisfy investors. New software license sales and cloud subscriptions eked out a 1% gain in the latest quarter.
That prompted Ellison to promise "startling" new cloud partnerships that include rivals such as Microsoft (MSFT) and Salesforce.com (CRM). (Microsoft owns and publishes moneyNOW, an MSN Money site.) He wasn't more specific about such plans, and that's a problem.
Ellison, whose $96.1 million compensation makes him makes him the country's highest-paid CEO, knows better than most that talk is cheap. For years, the company has grown through acquisitions, and, with the exception of 2009's $7.4 billion deal for Sun Microsystems, they've worked out.
The billionaire with a fondness for sailing, fighter jets and private islands is either going to have to write more checks or figure out a way to get Oracle growing organically again. Either scenario will present plenty of challenges.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).
Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More
More Market News
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'