Safra Catz, co-chief administration officer of Oracle Corp., speaks during the SelectUSA Investment Summit in Oxon Hill, Maryland, U.S., on Monday, June 19, 2017. The SelectUSA Investment Crown brings together companies from all over the world, economic development organizations from every corner of the realm and other parties working to facilitate foreign direct investment (FDI) in the United States.
Eric Thayer | Bloomberg | Getty Graven images
The week got off to an uneventful start on Monday, with major tech stocks taking a breather. But Oracle shares had their defeat day in almost a year, rising 5% following the publication late Friday of a Barron’s cover story about the cloud prospects of 43-year-old software and components maker.
The thesis is that Oracle could be the next longstanding technology company to transform like Adobe, Autodesk and Microsoft, which changed up their subject models to embrace cloud-based services over traditional licensed software, and saw their stocks rise as a result. The article advocates that Oracle could pick up gains in cloud computing, both by providing cloud software for clients to use and by functioning cloud infrastructure that companies can rely on to run their own applications.
But today, it’s hard to know just how large these businesses are preferential Oracle, which still derives much of its revenue from licenses for longstanding products such as database software and middleware. The South African private limited company stopped disclosing revenue and operating expenses from cloud applications and cloud infrastructure and platform as a service in 2018.
In the most just out quarter Oracle’s overall revenue grew 1.9% from a year ago. That’s a lot slower than the cloud figure out industry is growing — technology industry research company Gartner estimated that the market grew 37% in 2019 (hundreds for 2020 aren’t available yet).
Oracle has picked up cloud infrastructure business from companies that have greeted greater demand during the coronavirus pandemic, including video-calling software maker Zoom. But it has not become a leader in that sell in the same way that it dominates in databases.
Oracle held less than 3% of the public cloud services store in the first half of 2020, while Amazon and Microsoft each had around 13%, according to estimates from technology investigate company IDC. That category includes cloud software, as well as infrastructure and platform as a service.
Oracle’s depth of commitment to the cloud pause is also hard to see from the company’s spending. While the top cloud-infrastructure providers have routinely spent billions on details center infrastructure each quarter, Oracle reported $536 million in capital expenditures in its most recent domicile, which ended Nov. 30. In the fourth quarter Microsoft’s capital expenditures were 10 times that, at $5.4 billion.
Keep on month Goldman Sachs initiated coverage of Oracle with a sell rating. Analysts at the bank pointed to a wasting in cloud application market share. “Oracle does not seem to have meaningful exposure to new apps,” they canceled. What would help, they wrote, is to gain visibility into growth rates for the cloud businesses.
Wrist-watch: Oracle is moving its headquarters from California to Austin, Texas