FWIW here are my notes on the cc
Rev growth 13%, License growth 9% vs expected 14%, Services 16% yoy
Shortfall in growth due to a weaker than expected pipeline conversion. Much discussion on this point since last cc management made a point of stressing the strong pipeline outlook for Q1. But management clarified that they didn't state pipeline was weak, just that deals slipped, the conversion was less than expected. Reasons for the weaker conversion according to LE it was substantially the reorg that was responsible. Ray disagreed somewhat and said no consistent reasons. LE stated most of sales reorg behind them but Ray mentioned Europe hasn't reorged yet(?)
Operating expenses were up 11% and headcount up 12% yoy. Headcount growth should be very very slow. Number of support and marketing people good for a couple of years. Earlier LE used example of each org having it's own marketing as an inefficiency that they have reduced by centralizing. Gave impression that now that centralized would reduce. In sales headcount growth would be low single digits yet they have better coverage and higher quotas. Characterized as a huge achievement by LE. Obviously CRM sales and support needs different skills which would be achievement by retraining and hiring. Gave examples of other efficiencies achieved including iStore, closing 40 data centers, reducing email servers from 260 to 2, reducing HR DB servers from 70 to 1. All of this will result in $1B savings in expenses. Goal still 10% increase in margins.
In apps CRM was $31M up 238% and procurement $15M up 202%
Many, many comments stressing that they see license growth for the year better than last year, that is better than 16%. Very bullish on the remainder of the year. LE said he feels better about the year now than he did at the end of Q4. They see very good pipeline for Q2 and the year. They see very strong Sep due to large deals that slipped from Q1. Although they don't specify pipeline numbers they said pipeline growth would be well above 20% to make comments like they are. Ray stated win ratio is increasing even as they move into areas of increased competition such as CRM. Win ratios not analysed till 3 weeks after the qtr so these numbers refer to last Qtr. Stressed growing pipeline and increasing win ratio. Also mentioned that corporate visits to ORCL, a good leading indicator have increased 50% yoy.
Frustrated with lack of consistency qtr to qtr in license growth which pings between 10-20%. Jeff mentioned pretty consistent on an annual basis. Many comments such as that just the way it is. Trying to smooth it but likely won't see results till ASP business (Business on line) makes up larger portion of rev since it is an annuity type of business. LE stated in 5 yrs that majority of software will be hosted on ORCL servers so ASP business will be huge.
Growth by platform, unix up 3%, Win w/NT up 21% and NT only up 25% LE went on to state that statistics are misleading and that they see unix resurging very strong and NT diminishing
Consulting business growth may slow as they improve margins by upping utilization rates and implement their strategy to partner with big 5 (Well 4 0f 5, Anderson is in bed with SAP). Still see consulting as important to the success of their products but will continue to partner and provide tech consulting under umbrella of the big 5 with fees split appropriately.
iStore now open. In 12-18 months expect 80% of business to go thru iStore. Last cc LE said 18 months 100% so a bit of an over-reach there.
4 of big 5 now pushing ORCL CRM and procurement. LE characterized cooperation as spectacular with one conspicuous exception. Expect big announcements. LE let slip that HP will be announcing adoption of CRM. Mentioned that ORCL not targeting SEBL but SAP with CRM and their philosophy of a complete suite.
Stressed again that didn't see much Y2K turbulence except in ERP. Henley mentioned that ERP interest starting to increase and that going forward ERP will likely be a good solid business but without high growth of past. LE said companies (ie SAP) only in ERP and non-internet ERP at that are in a very grim place. LE said ORCL modern internet based ERP is getting good growth in mid size businesses where he believes they are #1. LE says street.com numbers show ORCL with 93% of the .com business marketshare and in 20 largest .com's 100%. LE stated this was a good thing since ERP diminishing which is also making yoy comparisons a little difficult. Wouldn't give specific figures but believe .com business now between 20-30% of rev. Later did mention that mid to smaller companies still showing good ERP interest as well as government, airlines and financials so ERP not dead yet.
IBM is aggressively bundling but LE stated IBM DB on unix still not widely accepted as is IBM mainframe products. IBM has won a few large deals from ORCL but in general don't feel IBM impacting DB growth. LE mentioned that 80% of IBM unix servers sell with ORCL DB. ORCL wins almost every time against MSFT in DB and LE stated wins are not about price. |
