ORACLE: Tale of A Software Giant

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Due to its innovations, Oracle Corporation (NASDAQ:ORCL) is the world’s number three software maker, and the largest database producer. Over the past few years the company has been trying to breakeven with hardware, but CEO Larry Ellison says it can only happen in the next quarter.

ORACLE: Tale of A Software Giant

Oracle Corporation (NASDAQ:ORCL) yesterday posted second quarter earnings of $3.12 billion from $2.78 billion in the year earlier period. Revenue increased 3.2% to $9.09 billion from $8.81 billion a year ago. Analysts had expected the company to report earnings of 61 cents a share on $9.02 billion, according to a consensus estimate from Thomson Reuters. However, Oracle’s announced second quarter earnings is an improvement from its previous quarter, when the company’s revenue dipped slightly from a year earlier. Software license updates and product support revenues were up 7% to $4.3 billion. Without the impact of the US dollar strengthening compared to foreign currencies, Oracle’s new software licenses and cloud software subscriptions revenues would have been up 18%.

Between January and December, the company’s market share increased due to the sale of software that help organizations reduce total cost of ownership and make their work easier. Oracle is however facing opposition from companies such as, International Business Machines Corp. (NYSE:IBM), Microsoft Corporation (NASDAQ:MSFT), and SAP AG (NYSE:SAP) (ETR:SAP). But with the rate of software growth, Oracle manages to increase market share as it struggles with its hardware division. Still, the sheer size and competitive strength of its rivals cannot be ignored. Oracle’s revenues stand at $36.93 billion, much behind two of its rivals. IBM has revenues of $104.69 billion, and Microsoft shows revenues of $72.36 billion. The net income of Oracle shows $10.1 billion, whereas International Business Machines Corp. (NYSE:IBM) and Microsoft Corporation (NASDAQ:MSFT) not only show bigger figures, but are also far ahead of Oracle with $16.26 billion and $15.7 billion respectively.

Oracle has been strengthening its software division since the beginning of the year. The database maker has been releasing quite a few products to increase its market share. In Spetember, the company announced new commercial extensions for MySQL Enterprise edition. It also announced in October the release of Oracle Extralogic Elastic Cloud. It has a new cloud database called 12c. And has just announced the release of its Cx Cloud service to help companies engage customers through the right channel at the right time.

A lot of its acquisitions this year were to shore up software revenues. In February, it acquired Taleo, a talent management software company. Oracle Corporation (NASDAQ:ORCL) also bought Vitrue, a social marketing platform provider. In July, it bought Involver, a social media development platform. In September, it acquired Select Minds, producer of a cloud-based social talent sourcing and corporate alumni management application.

Despite the challenge from players such as Microsoft Corporation (NASDAQ:MSFT), International Business Machines Corp. (NYSE:IBM), and SAP AG (NYSE:SAP) (ETR:SAP), Oracle expects to increase its software revenues and turn the corner in hardware sales. Many analysts expect the company to accomplish this feat. With more than 380,000 customers—including 100 of the Fortune 100—and with deployments across a wide variety of industries in more than 145 countries around the globe, Oracle Corporation (NASDAQ:ORCL) has surplus finances to develop the software and hardware that will keep it profitable.

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