Welcome!

Recurring Revenue Authors: Liz McMillan, Yeshim Deniz, Carmen Gonzalez, Elizabeth White, Pat Romanski

Related Topics: Recurring Revenue, Java IoT, @CloudExpo

Recurring Revenue: Article

Oracle Misses Badly, Spooks Everybody

Stock Price Buckles as Investors Fear Harbinger of the Future

Oracle zigged when it was expected to zag Tuesday and came in with a nasty fiscal Q2 miss that caused its stock price to buckle close to 10% after-hours for fear the results are a harbinger of the broad-based tech slowdown everybody's afraid of given the newspaper headlines, especially out of Europe.

Oracle in its conference call never once said it was, claiming instead that Q2 was a one-off event and that "short of a global meltdown" Q3 "won't be a repeat."

Obviously there was a struggle to close deals in Q2, which ended with the hateful November. Ellison, Catz and Hurd are three pretty slick articles, still it's hard to believe that the company didn't already have the management controls in place to monitor last-minute approvals but that's what Catz said. Approvals came through - lurchingly and apparently with more, higher-up signatures than they used to need - and Oracle has had to figure out how to deal with that wrinkle going forward. Apparently any deals missed are expected to close this quarter.

Both its Q2 revenue and earnings were short of consensus. It reported earning 54 cents a share, up 6%, on revenues of $8.79 billion, up 2% year-over-year, when the Street thought it would do 57 cents on $9.23 billion. GAAP income was up 17% to $2.2 billion or 43 cents a share. Unfortunately Oracle had guided to revenue of $8.99 billion-$9.34 billion.

It said new licenses were up 2% to $2 billion when it had guided to an increase of 6%-16% and updates and product support was up 9% to $4 billion.

It's supposedly not seeing a slowdown in Europe. It even said the US public sector was pretty good. CRM is supposed to be up close to 20%. Most of everything else, however, looks off.

Hardware was down 14% to $953 million - when it was supposed to be flat to down 5% - and that's despite what Oracle CEO Larry Ellison said was accelerated sales of engineered systems.

According to him "Exadata growth was well over 100% compared to last year, and Exalogic grew more than 100% on a sequential basis. We shipped our first SPARC SuperCluster in Q2 and expect to begin deliveries of our Exalytics system and the Oracle Big Data Appliance in Q3."

Evidently the product transition from the T3 to T4 Sparc chip was a hold-up since it requires a brand new system and people aren't going to buy outdated equipment so late in the cycle. In addition, Oracle could only deliver a few SuperClusters since they only became available at the end of the quarter. But Hurd maintains that Oracle pipeline is as full as it's ever been, with Exalogic ramping faster than the Exadata machine, something he's said before.

Larry said 200 Exadata/logic machines were sold in Q2 and prophesized that 300 would be sold this quarter and 400 in Q4. By then they'll be a billion-dollar business that he said will double next fiscal year. Bernstein ace analyst Toni Sacconaghi noticed that wasn't quite as many as previously forecast and Ellison had to admit he was right. Oracle might not triple its installed base, maybe it'll only be up 2.5x, Ellison said, but "It's still spectacular."

Oracle's GAAP operating margin was 35%; its non-GAAP margin was 45%, which it's pleased enough with, and it claims it should return to pre-Sun margins soon.

Oracle's workforce was up 1,700 salespeople in the first half.

Co-president Mark Hurd said in a statement, "We believe that this increase in our field organization combined with innovative new products like Fusion Cloud ERP and Cloud CRM will enable solid organic growth in the second half of this year."

Oracle exceeded estimates in the four previous quarters and it's going to have tough compare this quarter because last year was sensational. It's forecasting total revenues will be up 3%-7% this quarter. That would work out to somewhere between $9 billion and $9.42 billion. It said new software licenses would be flat to up 10% and hardware down 5% to 15%. Adjusted earning should be 56 cents-59 cents. The Street had it down for 58 cents on $9.46 billion.

To console investors Oracle said it could buy back another $5 billion worth of stock at some point. It's got $31 billion in the bank.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
SYS-CON Events announced today that Mobile Create USA will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Mobile Create USA Inc. is an MVNO-based business model that uses portable communication devices and cellular-based infrastructure in the development, sales, operation and mobile communications systems incorporating GPS capabi...
SYS-CON Events announced today that Enroute Lab will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Enroute Lab is an industrial design, research and development company of unmanned robotic vehicle system. For more information, please visit http://elab.co.jp/.
SYS-CON Events announced today that Suzuki Inc. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Suzuki Inc. is a semiconductor-related business, including sales of consuming parts, parts repair, and maintenance for semiconductor manufacturing machines, etc. It is also a health care business providing experimental research for...
Real IoT production deployments running at scale are collecting sensor data from hundreds / thousands / millions of devices. The goal is to take business-critical actions on the real-time data and find insights from stored datasets. In his session at @ThingsExpo, John Walicki, Watson IoT Developer Advocate at IBM Cloud, will provide a fast-paced developer journey that follows the IoT sensor data from generation, to edge gateway, to edge analytics, to encryption, to the IBM Bluemix cloud, to Wa...
SYS-CON Events announced today that Massive Networks, that helps your business operate seamlessly with fast, reliable, and secure internet and network solutions, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. As a premier telecommunications provider, Massive Networks is headquartered out of Louisville, Colorado. With years of experience under their belt, their team of...
SYS-CON Events announced today that Nihon Micron will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Nihon Micron Co., Ltd. strives for technological innovation to establish high-density, high-precision processing technology for providing printed circuit board and metal mount RFID tags used for communication devices. For more inf...
SYS-CON Events announced today that mruby Forum will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. mruby is the lightweight implementation of the Ruby language. We introduce mruby and the mruby IoT framework that enhances development productivity. For more information, visit http://forum.mruby.org/.
In his session at @ThingsExpo, Greg Gorman is the Director, IoT Developer Ecosystem, Watson IoT, will provide a short tutorial on Node-RED, a Node.js-based programming tool for wiring together hardware devices, APIs and online services in new and interesting ways. It provides a browser-based editor that makes it easy to wire together flows using a wide range of nodes in the palette that can be deployed to its runtime in a single-click. There is a large library of contributed nodes that help so...
SYS-CON Events announced today that Ryobi Systems will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Ryobi Systems Co., Ltd., as an information service company, specialized in business support for local governments and medical industry. We are challenging to achive the precision farming with AI. For more information, visit http:...
SYS-CON Events announced today that SIGMA Corporation will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. uLaser flow inspection device from the Japanese top share to Global Standard! Then, make the best use of data to flip to next page. For more information, visit http://www.sigma-k.co.jp/en/.
SYS-CON Events announced today that Daiya Industry will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Daiya Industry specializes in orthotic support systems and assistive devices with pneumatic artificial muscles in order to contribute to an extended healthy life expectancy. For more information, please visit https://www.daiyak...
SYS-CON Events announced today that B2Cloud will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. B2Cloud specializes in IoT devices for preventive and predictive maintenance in any kind of equipment retrieving data like Energy consumption, working time, temperature, humidity, pressure, etc.
SYS-CON Events announced today that NetApp has been named “Bronze Sponsor” of SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. NetApp is the data authority for hybrid cloud. NetApp provides a full range of hybrid cloud data services that simplify management of applications and data across cloud and on-premises environments to accelerate digital transformation. Together with their partners, NetApp em...
What is the best strategy for selecting the right offshore company for your business? In his session at 21st Cloud Expo, Alan Winters, U.S. Head of Business Development at MobiDev, will discuss the things to look for - positive and negative - in evaluating your options. He will also discuss how to maximize productivity with your offshore developers. Before you start your search, clearly understand your business needs and how that impacts software choices.
SYS-CON Events announced today that Interface Corporation will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Interface Corporation is a company developing, manufacturing and marketing high quality and wide variety of industrial computers and interface modules such as PCIs and PCI express. For more information, visit http://www.i...
SYS-CON Events announced today that Keisoku Research Consultant Co. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Keisoku Research Consultant, Co. offers research and consulting in a wide range of civil engineering-related fields from information construction to preservation of cultural properties. For more information, vi...
SYS-CON Events announced today that MIRAI Inc. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MIRAI Inc. are IT consultants from the public sector whose mission is to solve social issues by technology and innovation and to create a meaningful future for people.
SYS-CON Events announced today that Fusic will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Fusic Co. provides mocks as virtual IoT devices. You can customize mocks, and get any amount of data at any time in your test. For more information, visit https://fusic.co.jp/english/.
SYS-CON Events announced today that N3N will exhibit at SYS-CON's @ThingsExpo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. N3N’s solutions increase the effectiveness of operations and control centers, increase the value of IoT investments, and facilitate real-time operational decision making. N3N enables operations teams with a four dimensional digital “big board” that consolidates real-time live video feeds alongside IoT sensor data a...
Mobile device usage has increased exponentially during the past several years, as consumers rely on handhelds for everything from news and weather to banking and purchases. What can we expect in the next few years? The way in which we interact with our devices will fundamentally change, as businesses leverage Artificial Intelligence. We already see this taking shape as businesses leverage AI for cost savings and customer responsiveness. This trend will continue, as AI is used for more sophistica...