Following up a dismal Q3 earnings announcement, Oracle executives had some explaining to do on Wednesday after the bell.
Analysts and investors asked pointed questions and demanded frank answers during yesterday's conference call.
For the most part, the trio of CEO Larry Ellison, CFO Safra Catz, and co-president Mark Hurd responded candidly (with positive spins much of the time) with the latter two offering the most explanations for Q3's troubles.
Let's take a look at some of the highlights.
Hurd on sales strategy vs. execution:
...We have increased the sales force dramatically and we feel great about our coverage, and that really shows up first in the pipeline performance that we got. Our pipeline is up significantly. We don't give you a number because frankly I don't want you to give me a comparison every quarter with the pipe, but it is up materially.
The issue for us is simply conversion. Listen, you can come up and anybody can come up with all kinds of factors. There's always something going on around the world at any given time, and for us we feel good about our ability to execute through it. In this case, as I said, it really was just the conversion rate against the context of a materially higher pipeline.
As far as it being the economy, there's no really new news on the economy. As I mentioned, it doesn't help that the sequester deadline is on the last day of our quarter, and so that has a little bit of an impact here in North America but not necessarily anywhere else. The economy has been as it is in Europe for a while, so there's no real new news.
And then finally, on sales execution. Why we think that's it is frankly because it's playing out exactly that way as deals kind of flop over right into Q4. And so especially with the newest folks, they're really geared to their annual target and there's a little less urgency about Q3.
For you who have covered Oracle for so, so long and for some of us who have been here a long time, it was very Q3 and now it's extremely Q4 around here. And that is something we're kind of used to -- except when there's acquisitions. Sometimes you don't see it as much because of the new companies, what they bring, and they change the seasonality a bit. But ultimately Q3 is very similar to Q2, and then Q4 is the big quarter. Everybody's aimed at Q4, and it really feels like that around here right now.
Things might look better for Oracle this coming quarter. For starters, the hardware giant is introducing new SPARC servers, touted to be using "the world's fastest microprocessor," at its Redwood Shores, Calif. headquarters next Tuesday.
Along with talking up cloud and Fusion apps, Ellison offered a glimpse at what we can expect from the upcoming announcement:
Next week we'll start deliveries of our next generation of servers, built using our new SPARC T5 microprocessor, the world's fastest microprocessor. Next week we'll publish 17 world record benchmarks, including a TPC benchmark showing that the SPARC T5 is the fastest processor in the world for database and the spec J enterprise benchmark showing the SPARC T5 is the fastest processor in the world for Java middleware.
Our new T5 servers have up to eight processors that are more than twice as fast as the T4 systems they replace. Even more important, our new M5 server which has up to 32 processors and runs the Oracle database over 10 times faster than the similarly priced old M9000 server it replaces. With the delivery of the M5 server next week, Oracle will have finished upgrading every server in the SPARC product line, dating from the time we acquired Sun.