Oracle (
ORCL
) will report its Q1 FY13 earnings on September 20. Oracle has been
trying to improve its hardware sales and gross margins since the
acquisition of Sun Microsystems. Oracle had a fairly slow Q4 FY12,
in terms of revenue as total revenues were up 1% y-o-y at
$10.9 billion. Earnings per share was up 11% y-o-y at
$0.69, while operating cash flow for fiscal year 2012 was $13.7
billion, up 23% compared to last year. In this earnings
release, we will monitor its cloud strategy as Oracle has been on
an acquisition spree, snapping up companies in social media
marketing and strategy. It has acquired companies such as Skire,
Involver and Xsigo recently, which shows Oracles intent to get into
virtualization, project management and social media analytics.
Check out our complete analysis of Oracle
Big Data Opportunity
Oracle is trying to capitalize is Big Data. It launched the
Exalytics in-memory appliance, which competes directly with SAP's
popular HANA offering. It also launched Advanced Analytics that
enables users to run scripts for business intelligence applications
in its Big Data appliance. Since SAP's HANA has already been in the
market for about a year, it'll be interesting to see what Oracle
has in mind to capture some market share in this space.
Enterprise hardware offerings like the Exalytics appliance will
not only help the company ride the Big Data trend but also enable
it to improve its hardware margins by phasing out older legacy
hardware, launching new high-margin hardware and bundling it with
its software products. Though its hardware revenue has taken a hit
recently, we expect it to improve in the coming years.
New Growth Markets
Oracle has been focusing on acquisitions in social media,
virtualization and project management and has acquired companies in
these industries. We expect these are the new growth opportunities
being targeted by Oracle.
Oracle has entered into an agreement to acquire Xsigo Systems, a
leading network virtualization company. It simplifies cloud
infrastructure by using software-defined networking technology to
allow customers to dynamically connect any server to any network as
well as storage, resulting in efficient resource usage. We expect
the technology of Xsigo to be integrated with Oracle VM for server
virtualization, making Oracle cloud environment more cost
effective.
It has also acquired Skire, a program management and
facilities management software provider. Skire has applications
both for the cloud and on-premise deployment and provides a
complete set of management and governance tools from planning to
the operations execution stage. This is mainly used by companies to
manage their expansion and construction programs. Oracle will
integrate Skire's technologies with its range of Primavera
products.
In the social media space, it has acquired Involver that mainly
caters to the creation of campaigns on Facebook. It is a Facebook
Marketing Developer and a technology provider for Facebook's
internal marketing team. It pioneered social apps by creating
the first social app suite on Facebook and is currently
leading the industry with Social Markup Language (SML) and Visual
SML. This allows front-end developers to achieve what Involver
calls a "pixel-perfect" application and helps marketers customize
applications. It also provides an intuitive interface to build the
campaign with no requirement for coding. This is Oracle's third
acquisition in the social media marketing space after its
acquisition of Vitrue and Collective Intellect.
We currently have a
$39.11 Trefis price estimate for Oracle
, which stands nearly 20% above its current market price.
Database, middleware and application software accounts for
nearly 80% of its value, while enterprise server and storage
hardware accounts for more than 10%.
Understand How
a Company's Products Impact its Stock Price at Trefis