It is rare for Oracle to have a bad week but as it closed out its Q1, the following emerged:
James Farrar writes: Oracle under fire over ethics again: Feds investigating bribery for business in Africa saying that:
Oracle could face stiff penalties of up to $2 million per incident under the US Foreign Corrupt Practices Act which makes it illegal to bribe a government official anywhere in the world...
The biggest bottom line impact could be the potential loss of business upon conviction if Oracle is banned from public sector contracting in many countries...
News of the investigation comes after a run of high profile challenges to Oracle’s reputation includingremoval from the Nasdaq OMX Sustainability index for lack of sustainability reporting, removal from the FTSE4Good Index for lack of Human Rights protections and a hostile shareholder resolution demanding a board sub committee for sustainability to ensure Oracle ‘walks its talk’ on sustainability.
Oracle is no stranger to accusations of corruption. Last year, Oracle got into trouble for allegedly over charging the US government at the expense of taxpayers.
Next up, a judge overturned Oracle's $1.3 billion damages award it won against SAP in the TomorrowNow case:
Judge Hamilton criticised Oracle’s executives for having given “self-serving testimony … regarding the price they claim they would have demanded in an admittedly fictional negotiation.”
She also said the Oracle camp had “proffered the speculative opinion of its damages expert, which was based on little more than guesses about the parties’ expectations.”
That news alone hit Oracle's share price.
I was not surprised at the judgment. When the trial jury made its award many of my analyst colleagues drew a collective sharp intake of breath. No-one I know thought the award would stand up on appeal though Oracle got some great PR out of it.
When I met SAP execs late last evening, they were understandably beaming with smiles. But then Oracle has made clear it plans to pursue this matter, most likely to the bitter end.
Oracle may see this as a minor setback but the implications are far wider. Oracle has an outstanding IP theft case against third party support specialist RiminiStreet. That case is being heard in Nevada and while the facts are different, it is a case Oracle cannot afford to lose. If RiminiStreet wins, then it becomes open season on Oracle's lucrative maintenance support business from a range of potential third party suppliers who are watching the case with keen interest.
And if that wasn't enough, Marc Benioff, himself ex-Oracle, had former presidents Ray Lane and Charles Phillips on stage at Dreamforce, pitching their respective cloud ERP plays. My thoughts turned to what Larry Ellison, CEO Oracle might be thinking. I tweeted:
Larry Ellison must be wondering: 'What the hell did I breed?'
It's not all bad news for Oracle. I hear its crack sales people are selling million dollar and up Exadata boxes at a good clip. We'll find out at the next earnings call.