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Oracle's Acquisition and New Products Can Take the Stock to New Levels

August 19, 2014 | About:
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kcpl

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Oracle (ORCL) shares took a solid beating after reporting a disappointing final quarter results. The company missed estimates on both earnings and revenue as it is attempting to transition itself into a cloud supplier. Oracle is also confronting rivalry from the likes of SAP (SAP) and Salesforce.com. Can Oracle defeat the challenges that it is facing and enhance its performance?

Cloud prospects

Oracle is looking to turn into an aggregate cloud solutions supplier. It is focusing on distributed computing's two most-profitable segments, software-as-a-service (SaaS) and platform-as-a-service (PaaS). Oracle is attempting to create a complete and cutting edge arrangement of SaasS products in the cloud, including customer relationship management (CRM), sales, CRM service, and advertising.

It is including center human resources, enlisting, ability administration, and payroll in human capital management to widen its portfolio. Furthermore, Oracle has bookkeeping, acquisition, supply chain, and venture management services in its line-up.

Better times ahead

All these SaaS applications operate on Oracle's in-memory, multi-inhabitant database, and are created using JAVA. The organization has extended, specialized, and strengthened its sales group to sell SaaS and PaaS subscriptions. On the back of such developments, Oracle plans to develop its SaaS bookings by in excess of half in this fiscal year. Indeed, the organization's moves have effectively started proving to be fruitful as Oracle gained 120 new cloud enterprise resource planning (ERP) customers in the final quarter alone.

Also, Oracle's cloud bookings were up 37% last year, with the final quarter turning in the best performance. In addition, development in its Fusion product offering up cloud bookings was thrice the general development rate.

All things considered; Oracle included 870 cloud customers in the final quarter, incorporating 320 customers in human capital management (HCM), with 110 HCM customers picking the Fusion products. Oracle is increasing its customer base at four to five times the rate of adversary Workday, which has added 75 new customers till date. In the customer experience service line, Oracle included 430 customers, with 120-plus Fusion sales wins. The restructuring of the organization is permitting it to report solid development in showcasing mechanization, with bookings growth of 200% last quarter.

The latest acquisition

To quicken its development, Oracle has made a paramount acquisition. The organization is on track to finish a deal to purchase Micros Systems for more than $5 billion. Micros Systems is making hardware and software for the hospitality and retail industries. Its offerings incorporate innovation used in purpose of-sale cash registers.

This acquisition should result in substantial synergies for Oracle and extend its presence in the hospitality industry. Micros Systems was an Oracle partner earlier. Micros Systems counts enormous names such as the Hilton, Hyatt and Marriott inn chains as clients.

Micros reported solid growth in the third quarter, with revenue up 11% year-over-year, furthermore increased its direction. So, Oracle is making a decent move with this acquisition as it will help it go up against SAP and Salesforce in the hospitality industry.

SAP's danger

SAP is making some truly impressive moves. It is a force to reckon with in the CRM space, ahead of Oracle, and is attempting to broaden its lead in the wake of acquiring Hybris.

The acquisition of Hybris has bolstered SAP's e-business, master information administration, and application portfolio. As a result, SAP customers are presently fit to choose an e-commerce platform as per their necessity. Furthermore, SAP is currently giving access to item data management, content administration, and request administration.

Conclusion

Oracle may have put in a worse-than-anticipated performance in the last quarter, however the organization's performance can enhance later on. Hence, investors shouldn't discount Oracle as it looks like a good buy for the long run.


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