Safra Catz, Oracle's president and chief financial officer, outlined the company's third quarter issues, emphasized the company's cloud and on-premise application selection and defended the hardware business.
In an appearance at the Wells Fargo Tech Transformation Summit, Catz gave an upfront lecture to address the company's issues. Wells Fargo analyst Jason Maynard got a few questions in, but Catz put him in a corner. Catz noted:
Poor Jason has questions. I don't know what they are, but I know my answers already. So we are going to do it that way. Because I'm here to actually tell you what I think matters, and I will give you a chance, Jason.
From there, Catz went on a bit of a rant. Here's the breakdown:
Catz acknowledged that the third quarter results were ugly, but that "happens every once in a while." She noted that sales execution was an issue and the pipeline still looks good. She said:
It was literally just sloppy, just lack of discipline, just very Q3. Happens to us. Always happens very late in the quarter as the reps decide I'm not going to push that hard. My deal doesn't matter. And we have thousands and thousands of reps, and most deals go in.
Catz talked about the software business and how middleware and database remains strong. Singing a familiar Oracle tune, she added that the company's database was the backbone of cloud providers. She also noted that customers still want on-premise applications. Referring to applications, she said:
You can have them on premise. It is not a dirty word. Most companies still want to have their ERP system in a building they own or control or have an ability to customize as they would like. You can have it on premise, great. You want it in a cloud? Do you want public or private? We are the only company that allows you to any of those three. And we build our products to work together.
On hiring salespeople and the product portfolio, Catz added:
How can the largest software distribution organization, probably in the world, the largest software sales force in the world still not have enough salespeople? Because we have got so many products. We are spending almost $5 billion a year, more than the revenues of many of these companies, sometimes many of them combined, to have the most -- the deepest and broadest product line, and we are winning.
And it is not obvious yet, just like it wasn't obvious in 1990 and it wasn't obvious and 1993 and 1995. And as the Internet bubble got big everybody thought Oracle was a has-been, hadn't been. But by 2000, Larry was on the cover of BusinessWeek again. And, you know what, you heard it here first. When this all shakes out, Oracle will be on the cover of BusinessWeek. Larry will be on the cover of BusinessWeek again. You'll see. And it will say just what it said then -- Oracle is cool again. Because when it all comes down and all the hype is over, our Company makes almost $40 billion a year in revenues and is one of the most profitable companies in the world. And you should not expect it to not keep growing. Q3 is a blip.
With 15 minutes to go, Maynard got a question in. He focused on sales productivity at first before getting to the elephants in the room: Fusion and hardware.
On Fusion, Catz reiterated customer choice and said:
Our customers upgrade over time. We are not pushing it. All of our products are continuing -- our baseline products, the E-Business Suite, PeopleSoft have all received new products, new versions relatively recently. And so what we do is -- you want a public cloud, good. You want a private cloud, good. You want it on premise, yes. You want choice D, all of the above, yes. Great. So we are very excited about it. It's -- listen, it was years in the making. And it is a huge effort. And it is our opportunity ultimately. We are really focused on making sure we are the number one applications company in the world, and we are going to do that, because we are still number two in that business behind SAP. And we just don't like being first loser. So we want to be winner. We are going for number one, and this is our chance and it will take a few years.
On hardware, Catz said the world just doesn't see Oracle's master plan yet. She added:
Exadata, Exalogic, all the Exes, it is the future. There is no question. It is only a matter of when we get there, because nothing runs Oracle better than Oracle hardware. That is a bottom-line answer, and, frankly, it is so much better. It is compelling. The fact that we sell as much as we do when we came out of nowhere on this is truly incredible. And it goes only to the power of these products...
And so, it is cheaper, faster. It is hard to even talk about. That is going to overwhelm everything else we do. Now on the SPARC line, there has absolutely been a transition. And it has been a tough transition, to be honest. The reality is this. We have now refreshed T-Series and M-Series. That M-Series, that is the first real refresh in the M-Series in seven years. The M9000, which it replaces, is seven years old. Okay?
We think that there is -- Solaris for us is still the largest installed base running Oracle. And so there are an awful lot of folks waiting for this new product. It will take a while to catch on, and it will be compelling. We hope and expect ultimately to give IBM a real run for their money for the customers who are focused on UNIX and who want to have a UNIX alternative. And that is -- and the fact is that the decline has sort of masked everything else. The M decline masked everything else.
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