Oracle's quarterly earnings look good, and their execs are crowing about how well their "surround SAP" strategy is working. And so it goes, another great quarter, another boastful conference call.
What's wrong with this picture quarter after quarter is that we mere mortals -- and I include some pretty smart people in that list -- are simply unable to parse what is really happening with respect to Oracle's acquisition strategy. No doubt the raw numbers are impressive, and who wouldn't want to crow about continued high profits and increased market share.
But behind the raw numbers are some serious questions about whether the $25 billion in acquisitions that Oracle has made recently are really paying off for shareholders. And herein lies my quarterly beef with Oracle: there seems to be a deliberate policy of not making clear how well the strategy is really working from a pure financial standpoint.
Analysts like Charlie Di Bona of Bernstein looked at last quarter's numbers and makes the following observation in his recent report:
"If we strip out 400 bps of currency benefit and $43M from the HYSL acq, license growth falls from 17.0% to only 10.9%. Furthermore, the organic growth rate is likely even less, as this still includes some benefit from other acq. that were not broken out."
If Charlie is right, and he has a great track record in this regard, then license growth at Oracle isn't as stellar as it appears, and may be well behind SAP's most recent quarter, when it reported a 16% growth in license revenues -- though without a similar currency adjustment.
But if things are going so well, why wouldn't Oracle help the mortals amongst those who follow the company and explain the accretive nature of all these acquisitions? From a PR standpoint it would be a major coup, because right now all that boasting every quarter is sullied by a legitimate doubt about how well things are really going.
Absent the hard facts, it becomes easy to assume the worst, which is that the financial part of the strategy isn't going as well as it could. Perhaps there are some good reasons for keeping the details regarding the true value of these acquisitions from analysts and other observers, and if someone has some suggestions for what those reasons are, please feel free to enlighten me and the rest of the market. Until then, I challenge Oracle to overcome this opacity crisis and start putting some more data behind its braggadacio. What could they possibly have to lose?