Is Wall Street’s grudge against Oracle warranted?

Despite less than stellar performance in a few areas, Oracle’s performance as discussed on their March 20th earnings call was generally held to be a solid quarter. Indeed, Oracle has all the elements of a successful stock option – a diversified portfolio, continued growth, and higher than expected earnings.

So, why isn’t its stock price increasing?

For the last five years, Oracle has outpaced the Dow by quite a bit. They have had amazing growth and exceeded market expectations. Then, last quarter, they hit a few widely publicized road blocks. While Oracle has never been a company that generated a lot of love, loyalty or fans, suddenly, everyone predicted the beginning of the end for Oracle.

With the results of last quarter in, it looks like those predictions may have been a bit premature.

So – why is Wall Street so quick to call Oracle out on one bad quarter?

Well, there are a lot of reasons. The often bombastic attitude of Oracle’s leadership doesn’t help Oracle’s case - there are many on Wall Street and in other industries who would love to see Oracle fail based on the prickly personalities at its helm alone, and drama just doesn’t do much for investor confidence.

A few analysts have begun to notice that Oracle’s stock seems to be undervalued. Oracle’s cash flow is strong; they do not specialize in any technologies on the verge of going obsolete; there are no current financial scandals to speak of; they have a solid, 4-star Morningstar rating and A1 rating from Moody’s; and, above all, Oracle’s growth has been remarkable- all the earmarks of a company whose stock should be shooting through the roof.

Should Oracle continue to have successful quarters, Wall Street will likely come around. But, given Oracle’s reputation for being bombastic, unpredictable and arrogant, it probably will never become an investor favorite like Apple or Google.

Larry Ellison’s new toy in New Zealand

Most people have hobbies of some sort. Some people build model cars. Others enjoy knitting. But Larry Ellison owns a very expensive milling machine in New Zealand and uses it to build ships.

On March 22, the Poseidon, a $1 million milling machine (New Zealand’s largest), cut through a red ribbon in celebration of its official opening.

While only recently officially christened, the machine has actually been in use for the last six months. It will be used to construct all the major components of Oracle Racing’s AC72 for the 2013 America’s Cup except for the hull, which, by the rules of the race, must be constructed in the team’s home country (Oracle Racing’s will be constructed in San Francisco). Ellison apparently has plans to keep the machine, which is owned by Ellison’s Core Builders Composites company, running long after the America’s Cup is over. Those close to Ellison have said he’s “pretty passionate” about this manufacturing business and is likely to keep it operating in New Zealand.

Amid pointed comments about Oracle’s earnings call last week, it’s refreshing to see another side of Oracle we rarely encounter.

Note to Oracle: Nobody likes a nuisance

By now, you probably know that Oracle is in the middle of a multi-billion dollar lawsuit against Google for patent infringement regarding Google’s use of patents Oracle feels are related to the Java programing language.

Earlier this month, San Francisco Judge William Alsup requested that Oracle withdraw three of the patents from the suit. He seems to be hoping for a quick and easy trial — something you unfortunately don’t see much of when Oracle is involved. In any case, it looks like Oracle’s big day in court is going to be April 16th. It doesn’t, however, look like this will be a smooth lawsuit like Oracle had been hoping, though, as they’ve been forced to drop charges on several patents, others are expiring soon, and it appears that they greatly overestimated the amount of money to be gained from this suit.

Indeed, the suit has slowly been whittled down from a major, $6 billion legal extravaganza it originally appeared to be to what is swiftly approaching a nuisance suit — the corporate, Silicon Valley version of your neighbor suing over your dog defecating on their lawn.

There are many theories as to the “real reason” why Oracle is suing Google, from wanting a share of profits from the wildly popular Android phones to speculations involving Larry Ellison’s personal devotion to The Art of War. I’m going to go out on a limb and suggest that Oracle’s executives and lawyers honestly believed they had much more to gain from this lawsuit than they actually do. If I’m correct, it’s kind of a pity for Oracle – the miscalculation not only wastes their time but makes them look pretty nasty. I mean, really… Who wants to be the guy who sues the company whose motto is “Don’t be evil?”

Backing up Exadata on the cheap

As consultant Eric Guyer puts it, “it’s not enough to buy one Exadata box.” And so the price point for many customers - especially those SMBs - may be out of reach.

That may explain why only 6% of respondents in SearchOracle.com’s recent survey have Exadata installed or plan to install it this year. A typical Exadata deal will easily set you back seven figures. From Guyer:

You kind of need three (Exadatas): one for production, another for standby and a third for development activities. This is because Oracle Exadata does not offer array mirroring and best practices dictate that development/test/QA be identical to–but not reside on–production servers.

But Guyer said a new report from NetApp may provide a way out of that. The report details how Exadata users can use NetApp technology to back up their Exadata. Guyer nicknamed the report Exadata for Less. Guyer details how a company can save money by avoiding licensing costs for RAC and Exadata Storage software on secondary and tertiary machines.

Could this development open up Exadata to the masses? Furthermore, is this Oracle’s way of opening up the platform so it can grab more users?

Larry Ellison demoted to 7th wealthiest person on earth

Bad news for Larry Ellison- He’s no longer among the top five richest people on earth, and will have to settle for the slightly less luxurious position of number seven, according to Bloomberg’s most recent list of billionaires.

Unfortunately for Ellison, Ingvar Kamprad, Swedish business magnate and founder of IKEA, suddenly moved from 126th wealthiest person on earth to 4th, and Amancio Ortega (Spanish fashion entrepreneur best known for the clothing chain Zara) nosed out Ellison for 6th position, with French luxury goods magnate Bernard Arnault taking the 5th slot.

Oh Larry… We know this must be very, very tough for you. There goes that new ivory back scratcher you were planning to buy. On the bright side, Ellison is still worth 38.2 billion, and is still the third richest American, after Bill Gates and Warren Buffett.

Larry Ellison — Philanthropist?

When you think of philanthropic CEOs, who crosses your mind? Bill and Melinda Gates? Sir Richard Branson? Mark Zuckerberg, perhaps? Larry Ellison usually doesn’t even register. Equities.com has released their list of the five most charitable CEOs in America. Much to the surprise of many, on the list was Larry Ellison.

“Firmly a member of the 1 percent, Larry Ellison’s passions include yachting, driving his exotic cars, and flying his private jets… However, before you grab the torches and pitchforks, know that Ellison has pledged or donated over $800 million to charity over the course of his life,” the article reads.

In 2010, Larry Ellison became one of the 40 billionaires to sign Warren Buffett’s Giving Pledge. On the Giving Pledge’s website, Ellison writes that virtually all of his assets are in a special trust, and that he plans to one day give away 95% of his wealth to charitable causes.

Is Ellison’s pledge for real, or just a publicity stunt? Does Ellison have a secret philanthropic side that just happens to clash horribly with his public image? It’s tough to say, but something to keep in mind is that the man in question is a person with an estimated net worth of $28 billion — $800 million, while still a hefty sum, may not be the sacrifice to Larry Ellison that it would be to us mere financial mortals.

Still, sometimes credit is due where credit is due — as bombastic as Ellison may be, it seems he is committing his share of good deeds.

Oracle continues attack on third-party support providers

Oracle has filed a lawsuit in U.S. District Court claiming that two third-party support providers violated Oracle’s intellectual property, with the case being similar to ongoing legal battles Oracle has with Rimini Street and SAP subsidiary TomorrowNow.

Oracle claims that Norcross, Ga.-based ServiceKey and Wilmington, Del.-based DLT Federal Business Systems Corporation (FBSC) downloaded Oracle support and technical documents so it could then turn around and provide them to its customers, a move Oracle says is illegal. Oracle claims companies duped by the two defendants included the U.S. Navy and the Federal Drug Administration.

The lawsuit also claims that several unnamed parties, called “Does 1-5″ in the complaint, used ServiceKey and DLT Oracle Support credentials to illegally download material.

Oracle is calling what the two companies did a “gray market conspiracy to sell support on Oracle hardware to customers with no active support contract with Oracle that would permit the customers to access or use Oracle’s support website,” according to the complaint.

“Neither the Defendants nor the customers that contracted with them directly had any right to access and/or download software patches or updates from Oracle, but Defendants falsely told their customers that Defendants could provide access and support,” the lawsuit reads.

The case is similar to lawsuits Oracle has filed against Rimini and TomorrowNow. Back in 2010 Oracle sued Rimini Street, claiming the company was using Oracle customers’ support logins to illegally download support materials and then provide third-party support to them. Rimini countersued Oracle, saying they were being anti-competitive. And a couple years prior to that, Oracle sued SAP over its subsidiary TomorrowNow, claiming the company engaged in copyright infringement and illegal downloads. Both cases are still in the courts.

RightNow- Oracle’s foothold in CEM

Last October, Oracle acquired RightNow for $1.5 billion. At the time, the move was rather unexpected on Oracle’s part, and left many industry insiders scratching their heads.

Now that the dust is settling, however, the strategy and intentions behind the RightNow acquisition are finally coming into focus.

Customer service has historically been a weak point for Oracle. “Customer service isn’t the strongest suit for Oracle,” said Ray Wang, CEO of Constellation Research.

Oracle does have strong call center technology in Oracle Contact On Demand, however. Was the intent behind this merger providing Oracle with the cloud framework it needed to challenge long-time rival Salesforce.com in the areas of customer experience management and multi-tenancy? Is Oracle looking to compete with other firms in the realm of customer experience

RightNow is known for providing customer-centric service, including utilizing social networking, live chat service and guided assistance. In the last few years, Oracle has purchased multiple firms for the sole purpose of gaining the rights to that organization’s particular product. For example, in June of last year, they purchased FatWire for access to their content management systems; Pillar Data Systems in order to have a strong storage foundation that July; and Datanomic that same month in order to have a base in data quality. RightNow fits right in as a part of their pattern of purchasing an entire firm in order to move into a market or compete in a new area.

Does Larry Ellison see RightNow as the key to doing battle with Salesforce?

Almost certainly. Forrester analyst Dianne Clarkson was quoted as saying, “RightNow has a lot to offer Oracle. Along with salesforce.com, we called out RightNow as a SaaS solution that was faster to deploy and easier to change than traditional on-premise offerings. RightNow is well positioned to give Oracle a customer service offering for the mid-market.”

It will be interesting to watch how this situation continues to unfold. Stay tuned…

SAP could license HANA to Oracle

SAP co-CEO Bill McDermott said in an interview published Monday that he could see SAP’s High Performance Analytic Appliance (HANA) being licensed to Oracle, one of its main rivals in the database and business applications space.

According to Reuters, McDermott told a German newspaper that the possibility exists.

“The question is whether Oracle can imagine it,” he said.

McDermott’s comment about “whether Oracle can imagine” the possibility of running Oracle applications on SAP HANA seems a bit ridiculous. Oracle applications already run on competing appliances such as Teradata and IBM Netezza. Also, SAP applications run on Oracle Exadata. It seems a strong possibility that Oracle would be open to the idea of Oracle applications running on SAP HANA.

SAP HANA could give Oracle shops another choice when it comes to appliances. HANA lines up against Oracle’s own in-memory appliance, Exalytics, as well as lining up indirectly against the Oracle Exadata database machine. In a recent SearchOracle.com survey, about 6% of Oracle shops said they would consider SAP HANA as an alternative to Exadata. That isn’t a lot, but it’s important to remember that SAP HANA just came out at the end of 2010.

Oracle vs. SAP…in databases?

In a press conference yesterday, SAP Co-CEO Jim Hagemann Snabe declared that the company will be going after Oracle…in the database market.

According to a Wall Street Journal blurbon the press conference, Snabe said that SAP is “ready to go for leadership in two new categories; namely the database business and the cloud business.”

The database business is one in which Oracle owns almost 50% of the market share. SAP, at about 2%, is barely a blip on the screen. And yet no one should be that surprised by Snabe’s comments. SAP is lining up its in-memory High-Performance Analytic Appliance (HANA) against appliances from Oracle such as Exadata and Exalytics. SAP has been pushing the in-memory database message for a while now, and is placing a bet that more companies will move toward in-memory for better performance.

Can SAP become a leader in databases? It is certainly possible, and not without precedent. IT companies rise and fall, and sometimes it happens quickly. I remember a few years back when Sun Microsystems started getting into the x86 server space. The company quickly built up its share competing against the likes of big boys IBM, HP and Dell. Then as Oracle acquired Sun, the company’s share in the x86 server market is going down just as rapidly, as Oracle is uninterested in selling low-margin x86 hardware. So certainly these are grand proclamations by SAP, but still worth keeping an eye on.