DDark clouds gather over Oracle Corporation (NASDAQ:ORCL) as cloud computing shines

Northern, WI 03/22/2013 (avauncer) - Oracle Corporation (NASDAQ:ORCL) (Current: $32.30, down by 9.69%) shares fell the highest since 2011 and missed analyst estimates. Customers are giving hardware and software a skip as they transition to cloud computing and online services. The company said in a statement that the third financial quarter profit was 65 cents per share excluding some items on adjusted sales amounting to $8.97 billion. The average analyst sales projection was sales of $9.37 billion at a profit of 66 cents per share. Larry Ellison the CEO has been cornered by customers who have been cutting down on using Oracle servers and are moving to web-based cloud computing thus reducing the demand for middleware, databases and hardware.

Hardware against cloud

The company said that its revenue had dropped last quarter and some of its large contracts had been delayed and most of those have now been signed. What this means is that the lull will be a short-lived one. Analysts have averred that with Oracle Corporation (NASDAQ:ORCL), there are not too many multi-quarter misses and one quarter cannot be considered to be a trend. However, hardware is a definite negative in the current-day scenario. Oracle has forecasted that there will be a decline of 13 percent to 23 percent for hardware product in the current quarter.

Acquisitions are the way to go

Rival companies such as Salesforce.com, Inc (NYSE:CRM) (Current: $172.73, Up by 0.13%) and Workday Inc (NYSE:WDAY) (Current: $61.11, Up by 1.31%) are proving to be tough competition as well. They have been selling their programs as cloud services and the Oracle application business is being hit. In comparison with Oracle’s other businesses, cloud-computing is still not very significant and it has been faring better in head-to-head competition with Workday Inc (NYSE:WDAY). Last year, Oracle Corporation (NASDAQ:ORCL) acquired RightNow Technologies Inc and Taleo Corp, both of which are cloud software companies and it hopes to retain its core base of corporate customers who have been transitioning from installed software to internet-based ones.

In the pipeline is the 12C database software that will be used for running web-based applications. Ellison said that the company will be looking for more acquisitions or grow by itself in an effort to boost sales to retail, banking and telecommunications sectors. Oracle had agreed to buy Acme Packet Inc at a cost of $2.1 million in Feb and most of its growth has come from acquisitions.