Oracle Q4 results still weak in all phases

Vendor still appears to be suffering despite SaaS sales rise

To the surprise of nobody, the haemorrhaging continues in Oracle's struggling hardware division. But the worse news for the Redwood City, California vendor is the poor performance of its core software products, which continue to struggle in an increasingly cloud-enabled world.

Oracle posted disappointing earnings company-wide on Thursday US time, disappointing investors and analysts.

Many responded with sharp criticism and speculation that Oracle is being left behind by smaller, nimbler competitors with hosted wares that trump big, expensive products, particularly in a lukewarm global economy and tepid IT marketplace.

For its fiscal Q4 ending 31 May, Oracle reported revenue of $10.9bn (£7.0bn), essentially unchanged from the same period a year ago and well short of analysts estimates of $11.1bn. Net profit rose 10 per cent to $3.8bn.

Of particular concern were revenues from new and subscription software sales, which crept up just one per cent to around $4bn.

On a conference call with analysts, Oracle CEO Larry Ellison (pictured, right) pinned the poor performance on a weak global economy.

"It was clearly an economic issue, not a product, competitive issue," Ellison said.

Pal Walravens, an analyst at JMP Securities, told Bloomberg Businessweek: "There's no growth at Oracle.

"The world is moving to SaaS and at some point all these big vendors need to get on board. But the bigger you are the harder it is."

Oracle CFO Safra Catz said the company expects revenue from new software licences and cloud subscriptions to grow somewhere between zero and eight per cent.

Josh Olson, an analyst at investment advisers Edward Jones and Co, told Bloomberg: "They were caught flat-footed by the interest in the SaaS model.

"Seasonally, the fourth quarter is their biggest and most important software quarter and we have a miss here on software. It appears the 'missed sales' execution continues."

Hardware woes continue

As expected, Oracle's hardware division continued its unabated decline with a 13 per cent drop in revenues to $849m.

Oracle has not posted a gain in hardware sales since the vendor acquired its way into the business with the 2010 purchase of Sun Microsystems for $6bn.

Some observers blame the hardware woes on Oracle's ambivalence towards the channel.

Following the Sun acquisition, Oracle became contemptuous towards resellers, believing they couldn't properly position and sell the products.

The Oracle hardware partner ranks thinned as providers were either pushed aside or walked away.

Oracle's services revenues fell about 9.5 per cent from the year-ago quarter as well.

Mark Moerdler, an analyst at Bernstein, told Reuters: "Organic growth is slowing and the company has a lot of pressures it has to deal with. They're late to the cloud and playing catch-up."

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