Yesterday's release of Oracle's most recent financials continued to push Oracle into a race for last place in the world of corporate transparency. Its disclosures were full of all sorts of information, except the information needed to really assess how well the company's acquisition strategy is doing. Charlie Di Bona of Sanford Bernstein put it this way: "An apples-to-apples comparison of ORCL’s current apps business with its constituent parts from one year ago is no longer explicitly possible given the reduced information provided by management."
At least Oracle is being consistent. Journalists coming to Oracle's Open World conference last October were greeted by a major shock -- their one-on-one interviews had been cancelled. Various excuses were given, from Reg FD issues to a desire from the top (read: Charles and Larry) to keep the unruly mobs of journalists "on message" by restricting their contact with unruly Oracle executives who might be tempted to go "off message."
It's a major contrast from how the competition, particularly SAP, and to a lesser extent Microsoft, view the issue of transparency. No one will ever claim that anyone in this industry is perfect, but to say that even Microsoft is head-and-shoulders above Oracle when it comes to putting journalists at its top industry shows in front of its top executives is saying a lot indeed.
Unfortunately, Microsoft is playing at the financial obfuscation game too. It recently decided not to break out any seperate numbers for its Dynamics enterprise software product line, burying their success -- or failure -- inside the general statements of its humongous Business Division, which includes the Office product suite. This puts everyone -- particularly analysts and investors -- at a disadvantage when it comes to trying to figure exactly how well Microsoft's enterprise apps business really is doing.
Why should anyone -- particularly customers -- give a hoot about these financial reporting issues? The main reason is that this is not just a race for technological dominance, it's a race for share of the customers' wallet. And nothing drives the kind of desperate maneuvers that garner bad headlines, legal sanction, and customer nightmares better than problems with the financial performance of a company, or an important division of a company. Being reassured that Oracle or Microsoft are making their numbers in the applications business makes it easier for customers to invest large amounts of money in these company's products. To bury information about these key parts of the business is to open up these companies to what may be unwarranted speculation. It would be better in my opinion to err on the side of too much information than to come out on the side of "trust me, everything is okay." That's not how to keep CEOs, CFOs, and CIOs, sleeping well at night.
Of course, the problem is that the news that does get revealed might not be what the obfuscators want everyone to hear. Indeed, the state of Oracle's applications license growth, according to Di Bona's analysis, is a little troubling: "excluding revenues from the SEBL and i-Flex acquisitions," Di Bona opines, "apps licenses grew only 1%" instead of the official 27.8%.
So the truth hurts. That's the problem with being a publicly-traded company. But it's better to deal with the truth than to traffic in half-truths, quarter-truths, or just plain lies. Isn't that what good corporate governance -- something that Oracle and Microsoft espouse -- is all about?