Even by Oracle's maverick standards, suddenly bringing forward its Q4 earnings call was a curve ball. At face value it could be suggested that it thought its full year results, generally outperforming expectations, were worth getting out quickly? No, nothing so simple at Redwood Shores and we suspect it was a deflection from different news. We’ll return to the prime root-cause candidates for Oracle smoke-screening later.
But back to the earnings announcement, which on the whole certainly edged ahead of our own forecast for the red giant.
- Non-GAAP EPS up 10 percent and Non-GAAP revenues up 1 percent to $11bn
- Non-GAAP new license revenues were up 7 percent although support and maintenance grew only by 5 percent to $4.2bn.
- Engineered Systems (Exa Stuff) grew according to Mark Hurd, to get to a “run-rate” of $250m per quarter. Cloud revenues were claimed to be about the same although it wasn’t clear if Exa Stuff in the cloud was also in the engineered systems run-rate.
- A share buy-back of $10bn was also announced. This suggests that growth both organic and through acquisition could slow. Maybe Oracle is suffering indigestion from its 75 acquisitions over the past decade, including its recent acquire-a-cloud run, or maybe it has run out of targets?
All in all and despite some pretty hefty deals that we actually saw getting deferred beyond May, the red-boys pulled out the stops and delivered sufficiently to calm some raw investor nerves.
So with a decent score-sheet, why the sudden urgency to announce?
We suspect that Oracle feared a dump-run on the stock before Thursday as a few stories converged and therefore went for the quick-fire good news smoke screen to get the analysts to focus on the good rather than the ugly.
So, what was spooking the analysts?
- Most damagingly the HP forced email revelations that illustrated the spat between Larry’s pal Hurd and the old stalwart of sales EVP Keith Block came to a head as Block quit a few days ago. It has been speculated that Block didn’t believe growth targets were possible, particularly in hardware, and especially as the channel performance is trending down. Such profound conflicts in the business can spook analysts looking for confidence. One of Blocks IM’s had stated Hurd was all noise and no results and that Sun was a dog.
- The earnings although strong concluded with some strong expectation management from Catz even though she stuttered through the call itself. Using the macro global economic indicators as the core reason - expectations were set ultra-conservatively by Catz and despite the blip in Q2, she rarely mis-guides.
- Larry has faced some pretty strong market back-lash to his recent rants about SAP, IBM and Salesforce, particularly in relation to his “U-Turn” on cloud - from “gibberish” to a billion dollar spin-baby at earnings calls within 12 months. Investors appreciate his constancy at the helm but increasingly random competitor bashing is un-nerving to the investor community, especially when a targets like SAP or IBM are clearly looking at more confident growth horizons.
- The markets have certainly been settled by the call regardless of the tactics. (ORCL up 3.69 percent to $28.12 as I type). Compared to fears of another Q2 miss, Q4 was on the money, even if it comes with concerns about sustainability into Q1 and FY13.