Oracle 11g is expected to be released later in 2007 and hopes are high that new database will drive revenue gains. Merrill Lynch analyst Kash Rangan said in a research note that databases account for 69 percent of Oracle's revenue and 11g could boost growth in fiscal 2008 and 2009.
The release of 10g drove four years of database license growth averaging 11%. With stronger product capabilities, we think 11g could do the same or better. It will likely have significant new functionality such as improved manageability, performance and security and new options that could drive incremental revenues.
Rangan also added that he expects database options will also pad Oracle's coffers. As a customer that means you're likely to see various flavors and featured add-ons to 11g. Audit Vault is at least one known option to 11g, said Rangan.
Oracle 11g has been in beta since Sept. 2006 and is expected to reduce storage demand due to better compression, manage unstructured data, fix human errors by rolling back changes and be more secure. Last year, Oracle touted 482 new features in 11g.
CEO Larry Ellison may give 11g some attention when Oracle reports its fiscal fourth quarter earnings June 26. Analysts in general are optimistic about Oracle's quarter. Among the items to watch:
Hyperion help: The Hyperion deal closed in mid-April and is expected to boost Oracle's earnings. The problem: Hyperion may make it difficult to compare applications growth with previous quarters.
Customer wins: W.R. Hambrecht analyst Robert Stimson says:
Our channel checks appear to indicate that the company had a very strong FQ4 driven by several large deals in the quarter. We have heard anecdotal evidence of large deals in the government and financial verticals, potentially one of the largest in company history. Although the timing of revenue
recognition from such large deals remains unknown, we believe this bodes well for FQ4 results and pipeline strength heading into FY:08. We would not be surprised to see Oracle pursue acquisitions in the government vertical to help deepen its presence in the space.
Pacific Crest analyst Brendan Barnicle agrees on the big deals. Here's his take:
We heard of several large deals in Q4, including two deals of $20 million. One $20 million deal was a large technology deal with a leading distribution and logistics company; it included $5 million in middleware. The second $20+ million deal was
a large applications deal with a major technology distributor. We heard of several other large deals across all verticals and products, including several SAP displacements. We did not hear of any mega deals in Q4. Rumors of $100 million deals persist, but it does not appear that any closed in the quarter, and we are skeptical that there is any deal that large in the pipeline.
The trash talk: Ellison is likely to dish out his usual complement of jabs to competitors. Given the launch of 11g perhaps database rivals like IBM take a hit. If not Ellison will target the usual suspects: Red Hat, SAP and BEA.
The target: Oracle is expected to report fourth quarter earnings of 35 cents a share on revenue of $5.6 billion.