Oracle's turn to cloud; Can it strike the balance cord?
American technology giant in global database industry Oracle Corporation is shifting its focus on cloud offerings. Of late the database major has been facing stiff competition from new technology companies which offer cost-effective solutions via the internet. The shift to cloud could affect Oracle's revenues coming from business fee from existing customers running Oracle software at their data centers, analyses technology experts.
After coming under the pressure of market competition from new age technology companies, Oracle Corporation is shifting gears to withstand the changing global business dynamics. The database major is also shifting its focus on cloud-based computing. This news already buoyed the market sentiment and shares rose ahead of the first quarter results. Sun Trust has upgraded Oracle's stock to 'buy' from 'neutral' just before the first quarter report. Technology and market analysts appreciate the Oracle's quick move to switch over to cloud-based offerings. Some analysts question that it depends upon how Oracle strike the balance between cloud offerings and traditional business customers.
Several new age technology companies pose severe business competition to the global database major Oracle Corporation. The US-based Oracle has been facing increased competition from new technology companies such as Salesforce.com, Amazon.com, workday, to name a few. These new age technology companies offer cost-effective database solutions and inexpensive enterprise services delivered via the internet.
The decision of Oracle to shift to cloud offerings is very much needed step from the database major, say analysts, while cautioning that it depends upon the company on how to balance these offerings with the existing traditional database systems and old customers. It may also impact Oracle's revenues in the form of business charges from customers for running Oracle software in their own data centers.
After rising over one percent on Wednesday, Oracle stock eased on Thursday early trading ahead of its first quarter results. It shed previous day's gain as the market turned into wait and watch mode over the quarterly numbers. Oracle shares were down by over 13 percent during the past three months. The drop was steeper after the announcement of fourth quarter results. Oracle blamed the reason for bleak performance over foreign exchange rate fluctuations.
Headquartered in Redwood City, Oracle Corporation may post revenues of $8.53billion from $8.6bn in the previous corresponding period. Oracle couldn't meet the consensus sales forecasts in the five out of the six quarters.
The earnings per share (EPS) could be 52 cents down from 62 cents in the previous corresponding quarter. Oracle traded 14 times expected earnings when compared to 82 for salesforce.com.
Microsoft stock trades 16 times earnings and International Business Machines (IBM) trades nine times of its earnings. These old-time technology giants are also exploring cloud computing platform.
Oracle share price was hovering $36.99 on Thursday intraday trading. September puts at strike prices of $38 and $37 were trading actively in near-term contracts. This indicates options traders are expecting a further drop in share price.