Eye on Oracle

Dec 21 2011   3:13PM GMT

Oracle boosts sales staff, cuts product support

Mark Fontecchio Mark Fontecchio Profile: Mark Fontecchio

Such is Wall Street that when your revenue increases 2.5% year-over-year, and your net income increases 17%, that your stock plummets like your company is going out of business.

This is a world of expectations, and according to financial analysts, Oracle missed them all over the place. While software revenue was up almost 7% in the last quarter, hardware revenue dive-bombed 14%. Of course Oracle execs had their reason ready: According to them, the transition from Sparc T3 to T4 delayed orders by some customers. Wait, I thought the focus of Oracle hardware was its Exaportfolio, ie. Exadata, Exalogic, and Exalytics? Right?¬†Suddenly a Sparc chip transition causes this much of a hiccup? OK…

On the expenses side, it is interesting to note that Oracle increased its sales and marketing budget by almost 11% compared to the same quarter last year. Oracle President Mark Hurd made a point of it, saying that Oracle has put “1,700 incremental sales resources into the field” since the beginning of the company’s fiscal year, which started in September.

Hurd added that Oracle has shown “strong expense discipline” while adding sales staff. Yep, that sounds about right. Hardware products and support expenses dropped 10% and 28%, respectively. Software licensing and product support expenses were also down 3% year over year. In other words, Oracle sales and marketing has been trending up since early 2010, while investment in Oracle products and support has been trending down.

What does this mean? Well, many Oracle customers complain that once they become Oracle customers, Oracle tends to forget about them. Hurd denied this in an interview at Oracle OpenWorld earlier this year. But the company’s SEC filings paint a picture of a company with a boosted sales staff and declining product and support budgets.

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