Subba’s Serendipitous moments

March 23, 2007

Oracle’s results are good; competitor bashing is also up!

Filed under: Business,Competition,Leadership — Subbaraman Iyer @ 12:16 pm

Oracle announced impressive results this quarter, beating the expectations in terms of both revenues and earnings.

  1. Revenue was $4.4 billion (up 27% a year ago) and net income at 20 cents a share.

  2. Total software revenue was up 25%, with database and new license revenues up 17%

  3. New applications licenses were up 55%, with middleware being a significant contributor.

However, it has become increasingly difficult to assess Oracle’s true performance because of the way it reports results. The main challenges that I face in understanding Oracle’s performance is:

  1. No clear breakdown on organic growth and the growth gained through acquisitions.

  2. It uses a broad category– technology and applications for financial reporting purposes, though I believe it would help everyone if it could segment it by database, middleware, application suite and standalone applications.

That way, it would help everyone make inter-company comparison and also inter-period comparison.

In the absence of this, I am inclined to be ever watchful of Oracle’s claims of beating the competition.

Speaking of competitor bashing, Oracle loses no opportunity to bash them up, and this briefing was no exception. Some of the brash statements made:

  • "Our middleware new license sales grew 82% in the third quarter and 62% over the last twelve months," said Ellison. "This compares to BEA’s growth rate of 8% in their most recently reported quarter and 12% over their last year. Not only are we growing faster than BEA, we’re now larger than they are in the middleware business."

  • "Our applications new license sales grew 57% in the third quarter and 61% over the last twelve months," said President, Charles Phillips. "This compares to SAP’s growth rate of 7% in their most recently reported quarter and 10% over their last year. Although SAP is still larger than Oracle in the applications business, we are closing the gap consistently and rapidly."

And it is difficult to verify these claims, because of the way Oracle reports the numbers. I only wish that there was more clarity and transparency and as one of the industry leaders, they set an example.

Over the past few months, I have had a chance to speak to several Oracle employees — from managers to senior executives. Almost all of them  divided their time talking about Oracle and indulging in competition bashing in equal measure.

I wonder is this success strategy of bashing up the competition a sustainable one?

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