Are Oracle’s Earnings a Fluke?

By Douglas A. McIntyre Published Dec 21, 6:10AM EST

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Oracle (NASDAQ: ORCL) earnings missed almost all Wall St. estimates and its shares fell 8%. The company has been among the most successful in the tech sector for years. Was the report a sign that Oracle has lost momentum, or has the entire enterprise software industry faltered?

Oracle’s sales rose only 2% in the quarter that ended November 30 to $8.29 billion. EPS was $0.43, compared to $0.37 last year. Hardware system revenue fell 10% to $1.58 billion.

Oracle is the world’s largest enterprise software company. In the past two years, it has faced more aggressive competition from Microsoft (NASDAQ: MSFT), IBM (NYSE: IBM), SAP (NASDAQ: SAP) and Salesforce.com (NYSE: CRM) in particular. Each has had a chance to examine Oracle’s strength as it grows, primarily through acquisition. Oracle is a particularly attractive target, as most market leaders are.

There is no evidence that IT departments at large companies and government enterprises have sharply curtailed their activity to upgrade essential systems. That likely will mean that Oracle has lost market share, and it probably will continue to do so. Competition has found weak spots in Oracle’s product and service lines.

Oracle has been successful in large part because CEO Larry Ellison has been particularly talented in his choice of buyout targets and his ability to almost seamlessly integrate these firms into his company. The integration process usually has kept sales from the new operations while effectively dropping costs.

One quarter does not mean Ellison’s miracle is over. A second weak quarter would.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.