Thursday, 26 June 2008

Oracle becoming Boring?

David Mitchell, who heads IT Research at Ovum, started his review of Oracle’s FY2008 results as follows:

“If I may borrow the phrase that my friend Richard Holway uses to describe UK companies that deliver consistently good results, Oracle is in danger of becoming boring.

Oracle set out five years ago to deliver a minimum 20% compound growth in non-GAAP EPS, and for the past four years has been exceeding that target - posting a CAGR of 26%. The continuation of the acquisition strategy, together with good fiscal management, has generated consistent returns and the bravado that once characterised it has faded, for the most part. The growth in free cash flow being generated continues to impress, with the 4Q08 figure growing 38% to $7.159 billion."

You can read David’s full review here Oracle: continued growth and a demanding future

I think you will find David’s comments on Oracle’s difficulties making any money out of their SaaS offerings, fascinating. They have only just turned a profit on the service. So God help the other product companies attempting the move. The transition to SaaS is certainly going to have some major effects on depressing company performance at software companies that traditionally sell product licences ‘upfront’. It will take a long time for the financial benefits to work through – during which shareholder patience might be tested somewhat.

No comments: