Ellison defends Oracle's cloud strategy and pricing against Amazon, Microsoft

Following a widely-noticed absence from the call last quarter, Oracle CEO Larry Ellison chimed in with promises about the coming year during Wednesday's second quarter earnings conference call.

Company executives likely went into the meeting more comfortable, even confident, given that earnings and product subscriptions increased noticeably over the last three months.

The Redwood Shores, Calif.-headquartered company was expected to report second quarter earnings of 67 cents a share with flat revenue of $9.2 billion. Morgan Stanley and RBC had already both cut their ratings last week, so things weren't looking great going into Wednesday's earnings announcement.

Nevertheless, Oracle did better than expected with second quarter earnings of $3.2 billion, or 56 cents a share, on revenue of $9.3 billion, up two percent annually. Non-GAAP earnings were 69 cents a share.

Oracle is going into 2014 with refreshed versions of the key products expected to drive revenue over the coming year, Ellison assured, highlighting updates to CRM and ERP applications as well as the flagship  multi-tenant Database 12c, which is designed specifically to serve cloud needs.

However, Oracle’s cloud strategy still seems, well, cloudy to some Wall Street analysts.

Ellison responded that the strategy is "to be a player in all three levels of the cloud," which he narrowed down to software, platform, and infrastructure. He further predicted that Oracle will be particularly strong in Platform-as-a-Service based on Oracle’s strength in databases as well its ownership of the Java programming language.

"We have a considerable advantage," Ellison defended. "At the infrastructure level, we intend to be price competitive with Amazon, Microsoft Azure and Rackspace.”

Ellison also boasted that Oracle has more enterprise SaaS applications than any other cloud provider.

Chief financial officer Safra Catz spoke in plainer terms, noting that Oracle has ramped up the sales organization for cloud to “full strength,” but she reasoned that it takes time for that to pay off.

Oracle president Mark Hurd added that those sales resources are driving 35 percent bookings growth in cloud, and triple digits in some core Fusion modules. The bad news, he lamented, is that those results are not displayed as licenses, but rather showing up as subscriptions.

Still, analysts kept coming back to the cloud topic again and again throughout the hour.

When asked about customer reception, Hurd replied that Oracle goes to market by “functional area,” such as HCM, acknowledging that some of those chief human resource officers have already been subscribers of Oracle’s HCM products before its cloud platform debuted in 2012.

Ellison emphasized, “We are organized against our secular competitors.” He specified that Oracle decided it had to line up an Oracle-Salesforce.com deal against Workday while also enabling a team that competes against its professional friend and foe Salesforce on other products.

He explained this is done to compete effectively against a “new generation of specialists."

Looking forward to the third quarter, Catz projected that total revenue will grow by roughly three to seven percent in constant dollars, or two to six percent in U.S. Dollars, with earnings of 68 to 72 cents per share in constant and reported dollars.