Brian, re: Hearing Microsoft's Footsteps
Thank for the article - I had not seen it, although there have been similar ones over the last year or so.
The following are some thoughts, on the article and related matters:
1. The sales of Oracle's basic platform (DBMS engine] had been moderating for some time, IMO due primarily to maturation of the market, offset somewhat by the stumbles of Sybase and Informix.
2. Offsetting this moderation has been Oracle's DB applications initiative, which under Ray Lane's leadership grew phenomenally until if became a major contributor to earnings.
3. This quarter, Oracle hit precisely the analysts' published operating earnings of $.15/share, but also took a non-recurring charge for acquisition costs of $.11/share, if I recall correctly. Much was said about slowing core growth and not meeting "whisper" numbers (as usual), as well as currency exchange rates. Much as with Microsoft, the stock had been bid up to new highs preceding the earnings, and sold off on the news.
4. Microsoft is certainly moving aggressively into the enterprise market for DBMS inter alia, as we have discussed ad nauseum in earlier posts. Regarding Oracle, it is in a serious battle to keep its market share and unit profit margins favorable for as long as possible. As they have good account control, and are initiating ports to NT as aggressively as possible, they are at least buying time - which is of course critical in adapting to new market realities. Their application business can also sustain them, inasmuch as Microsoft is not challenging Oracle in enterprise-level DB apps [at least not yet].
5. Whether Microsoft might buy an Oracle competitor [Sybase or Informix] is always a wild card, which could have significant psychological effect, at least short term.
6. IBM is trying to make DB2 an effective competitor on NT, but they have become such stumblebums in non-390 systems that it is difficult to call their chances.
7. NT is maturing rapidly, and continues to grow at a phenomenal rate. Customers like to have a one-stop offering, which is the problem Oracle faces on the low- to mid-range NT servers, where Microsoft took an early lead, and has the advantage of packaging. Oracle realizes this, and is now aggressively moving in the low- to mid-range NT server area.
I don't think the Oracle special charge of $.11 to earnings this quarter had much to do with the consolidation, but it is tough to tell. Maybe anything less than a blowout would have led to one. Anyway, Microsoft has that special charge due this quarter of $.10 of so, for the Comcast & WebTV investments, so it will be interesting to see how good investors' memories are. < g >
IMHO
Best regards,
Arno |
