Oracle leaps to record as cloud transition hits turning point

Oracle Corp. was late to the cloud revolution, allowing upstarts like Salesforce.com Inc. to find significant market share with software delivered over the internet, and has suffered while making an acquisition-fueled push into the space.

The Band-Aid appears to have come off Oracle’s wound, however, and the company seems assured that its healed finances will be better than ever. Investors showed belief after Oracle’s fiscal fourth-quarter earnings report Wednesday evening, sending shares that had never cracked $47 in regular trading, adjusted for splits, to more than $51 in after-hours action. If that move holds, Oracle would be worth more than $200 billion.

Oracle ORCL, +1.07%  profit and revenue had declined in each of its previous two fiscal years, after a steady yearslong climb. That is not surprising in a transition to cloud, as software companies trade large one-time payments for boxed software for long-term contracts paying out monthly fees spread out over the term.

This is especially true in Oracle’s case, as naysayers believe the company was mostly converting its large customer base into cloud buyers, effectively trading one form of payment for another. Executives on Wednesday, though, crowed about new customer wins, as well as convincing companies to sign on to more than just software-as-a-service but also its cloud computing and full platform offerings as well.

Co-Chief Executive Mark Hurd noted that about two-thirds of customers buying Oracle’s cloud Enterprise Resource Planning Software in the quarter were new customers, and ticked off a long list of companies Oracle has signed up. Founder and Chairman Larry Ellison noted that new customers are easier to convince on the cloud, leaving a lot of potential wins among its existing, on-premises customer base.

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