Oracle's fight for Wall Street cred
Published: 17 May 2006 12:20 BST
Wall Street remembers him when he was just plain "Chuck".
Chuck, as in Chuck Phillips, a Morgan Stanley star analyst who moved to Oracle three years ago and became its co-president — in the process jettisoning "Chuck" for "Charles".
But the old-school tie doesn't count for much when it comes to his former colleagues giving Oracle a thumbs up. Analysts have continuing complaints about Oracle, especially the way it slices and dices its quarterly results. Oracle's stock has remained stuck in the low teens seemingly forever. None of this makes any sense to Phillips, who confesses frustration with the pessimism voiced by his former colleagues.
That's one reason Oracle is launching a major advertising campaign, which, coincidentally or not, takes place just as archrival SAP kicks off its annual Sapphire user conference in Orlando, Florida.
Phillips recently chatted with ZDNet UK sister site CNET News.com about the database debate, Oracle's closely watched Project Fusion and the company's struggle to receive recognition as a growing enterprise.
Q: Why are you rolling out this ad now, and who are you targeting
with this ad? Buyers of SAP, buyers of Oracle or Oracle investors?
Phillips:
All of the above. It does have impact in the marketplace when customers
perceive that you have momentum and are gaining market share. It's
useful to get that information out to the marketplace.
The trouble is, I can't get the financial analysts to do that sort of work anymore. I guess they don't feel it's their job anymore, or they don't like math or whatever. So, I figured, let's go direct and get the message out, because the perception is that if you listened to SAP, you would think that they are growing faster.
You sound unhappy with the coverage Oracle is getting from Wall Street. Do you miss being an analyst?
No,
not if they're going to do it as poorly as they're doing it now. So no,
I don't miss it. I know how to do this, obviously, and it's not that
hard. This is not rocket science. You just have to do your homework.
Your ad claims that Oracle's applications licence business,
excluding acquisitions, rose 31 percent in the most recent quarter.
Your figure for SAP says its licence business grew 14 percent in its
most recent quarter, but that includes its middleware. Why include
middleware? What if its NetWeaver middleware is pulling down its
results?
When Oracle gives you an applications number, it's only
applications. It doesn't include middleware, databases or third-party
products. It's just pure applications that we sold during that quarter.
But when SAP gives you a licence number, it bundles in everything,
including its middleware NetWeaver, including third-party products —
and including our database, which they resell. All that is included as
SAP licence revenue.
If you believe them, that NetWeaver is growing faster than the rest of the company, and they are throwing out some pretty high growth rate figures, then that means its applications business would have to be growing even more slowly. If NetWeaver is growing faster than the total, then that means something is growing more slowly than the total.
Why did you compare only the most recent quarterly results? Why not compare a trailing 12-month period?
The
latest quarter is a fair comparison. With all the changes and
acquisitions we had, there was nothing else that was comparable. But
now, with this last quarter, it was the first time we had a quarter
that was somewhat comparable to the quarter a year ago. We owned
PeopleSoft in the prior year for the quarter that just ended, so the
only addition we had was one month worth of Siebel. We were able to
quantify the quarter and back out acquisitions, since it was only
Siebel (in the mix).
With all your acquisitions, how is timing looking for producing a single line of code for Project Fusion?
We
are saying the first components of Fusion will start to ship in 2007,
and the first version of the full suite will ship in 2008. We also told
people that we will give them choices. Even when Fusion ships, that
doesn't mean that we won't have new versions or new developments on
PeopleSoft, Siebel or J.D. Edwards, or the existing applications.
What are you doing to attract customers to spend the big bucks while they wait for Fusion to come out?
The
way we get our applications revenue to grow 82 percent is to have
people sign big deals. (Oracle's advertisement states that applications
licences grew 31 percent, excluding acquisitions.) Customers are
saying, "Oracle has taken me through upgrades many times before. I have
been with you when you had mainframe products, client-server products
to Internet products." They have been through this before with us with
other technologies, and they know we never leave anyone behind.
What about Fusion supporting competing databases, like your
PeopleSoft and J.D. Edwards does now? Are you any closer to making a
decision on this?
We are closer, but no decision has been made.
There are some technical hurdles — but it's not coming from us — on
whether other databases can accommodate the features that are needed.
We are working with third parties that are interested in supporting
Fusion with their databases, and we provided them with technological
documents to say, "This is what you need to do." And at this point, we
don't know if it's possible.
And ETA on when a decision might be reached?
We are not
controlling the schedule, at this point. In March, we provided to third
parties information on, "This is what's needed; here's what you need to
do, and here are the features that we use in our database that is not
in your database. And if you want to run Fusion applications, you have
to add it."
Who got these specifications, and what have they said?
It's
too early to tell, and we're not naming names. It's anyone who is
interested, essentially, in the database market. Each one has to...
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