Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Oracle May Be Flat in Q2, but It May Be Warming Up for a Strong 2014

Enterprise software giant Oracle will report the results from its latest quarter tomorrow, and, as with previous quarters, a handful of big questions hover around it. First, how much pressure is Oracle’s traditional accounting and HR software facing from the likes of newer cloud players like and Workday? And second, when will hardware sales start growing?

The consensus view of analysts calls for Oracle to report earnings of 67 cents a share on sales of $9.2 billion. Brad Reback of Stifel Nicolaus expects Oracle to report results that are more or less in line with the consensus.

But in the last year, Oracle has been reporting quarters that have either fallen short of the consensus, or with guidance that comes up short. When it last reported in September, earnings beat expectations on lighter-than-expected sales, but the forward guidance was not as negative. Oracle said at the time that sales would be more or less flat, meaning down by as much as one percent, and could grow by as much as two percent.

In a note to clients yesterday, Reback was a little more positive on Oracle’s prospects, though with some strong caveats. “We believe demand for ORCL’s solutions has stabilized and the company is starting to see traction from its new sales hires and recently refreshed products,” he wrote. “That said, we believe the demand environment remains challenging in pockets of the world and think the impact of having Thanksgiving fall so late in the quarter could limit upside.”

Others are still cautious. Brent Bracelin of Pacific Crest Securities is among them. In a note to clients this morning, he said he expects Oracle to report sales below the Street’s expectation this quarter and next quarter. “Estimates may still be too high” through the quarter ending in February, he wrote.

But Bracelin’s caution has its limits. Later next year, as demand builds for Oracle 12c, its new cloud-friendly database product, he expects Oracle to start growing again. “Oracle is in a much better position to respond to the changing data management market,” Bracelin writes. “While it is still growing its revenue a little slower than its peers, its new product investment could reaccelerate growth, and is driving better margins. In fact, we have more confidence in accelerating revenue growth at Oracle than at Microsoft or SAP.”

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik