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INDUSTRY TRENDS

Updated 12/20/11, 3:30PM HST, adds Market Update

Analysis of Oracle's Latest Quarterly Results

Oracle Runs Out of Oracles

Stock Takes a Big Dive in After-hours Trading

HAIKU, Maui, Dec 20, 2011 - Oopsy-daisy.  Oracle is running out of orackes. And the lights are dimming on the company as we near the Winter Solstice. Oracle has failed to deliver another oracle in its latest quarterly results. It  stubbed its toes on both revenues and earnings, coming well below the Wall Street estimates.  And the stock took a steep dive in after-hours trading.

Some analysts being quoted in the media seem to attribute that to some general industry malaise and the weakness in spending in the enterprise sector.  We don't see that.  Which is the reason for this quick comment.  We see Oracle's aggressive and arrogant behavior in the marketplace as the main reason for its shortfall.

Ever since he hired Mark Hurd after the latter was booted out of HP over a sex scandal, Larry Ellison has been engaging in a war of words with HP.  When we were in New York a couple of weeks ago, driving out of JFK we were struck by a huge billboard Oracle had placed over the Long Island Expressway expressly attacking HP.

Customers don't like aggressive and arrogant vendors. They like to work with companies that put the customer first. So they are choosing an alternative if they can help it. In Oracle's case, that would be IBM.  "When two fight the third one profits," goes an old Serbian proverb.  That would be Big Blue.

Rather than look for any industry omens in Oracle's lack of oracles in this quarter, investors looking for solace will probably find it in companies like IBM, Apple or Google which are driven by customer needs rather than their leaders' egos.  

In short, we don't see anything wrong with the IT industry at the moment that would warrant a correction.  But some of Oracle's leaders could use some attitude corrections.

Happy bargain hunting

Bob Djurdjevic

Market Update

HAIKU, Maui, Dec 21 - Oracle's steep dive in after-hours trading accelerated during today's regular market action.  The stock is down 14% as we write this, double the among of last night's drop.  And the fear of an industry wide slumped also pulled some other IT leaders' shares down with it, though not nearly by as much.  Take a look...

Don't expect such trends to continue. As we said when Oracle's latest results came out, we don't see anything wrong with the industry or customer spending. It's only Oracle that needed to make a correction.

Indeed, today (Dec 22), the only stock among the top leaders we follow to still be in the red this morning is Oracle (see the table on the right).

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