Will Oracle Corporation (ORCL)’s Revenues Continue to Decline?


Oracle Corporation (NYSE:ORCL) is experiencing a drop in new software licenses and its transition to cloud is creating a decline in revenues. Still the company is gearing up for a battle against Amazon.com, Inc. (NASDAQ:AMZN) in the cloud computing market. While Amazon.com, Inc. (NASDAQ:AMZN) has been going strong in the cloud space ever since it started operations, Oracle Corporation (NYSE:ORCL) is a late entrant. Bloomberg recently reported on Oracle Corporation (NYSE:ORCL)’s plans for its cloud unit and how the company is trying to compete with Amazon.com, Inc. (NASDAQ:AMZN).


Oracle Corporation (NYSE:ORCL) is betting on cloud computing to raise its efficiencies by allowing it to run everything itself, unlike its traditional business model, in which it sells customers hardware and software to run their own data centers. According to the article Oracle’s Chairman, Larry Ellison, at the Oracle OpenWorld conference in San Francisco, said that his company will have the same pricing for its cloud services as Amazon.com, Inc. (NASDAQ:AMZN) or any other infrastructure provider. The article also quoted him as saying that Oracle Corporation (NYSE:ORCL) has now got a new, much-upgraded platform.

Oracle Corporation (NYSE:ORCL) on its part has acknowledged that its revenues are getting hurt as customers transition from buying services directly to subscribing to them. In a conference call earlier this month, Oracle Corporation (NYSE:ORCL)’s new Co-CEO, Safra Catz, said that as customers migrate in large number to the cloud, she expects this transition to affect Oracle Corporation (NYSE:ORCL)’s revenues positively as the customers will be basically replacing their software-support payments with a cloud subscription.

Although analysts are happy with way Oracle Corporation (NYSE:ORCL) is going, they don’t fail to remark that the transition to cloud services is putting a lot of pressure to the financials of the company. In its latest quarterly results, Oracle Corporation (NYSE:ORCL) had revealed that there has been a 2% fall in new software licenses, but its cloud-computing unit saw a double digit growth in the same period.

As of June 30, 2014, Boykin Curry’s Eagle Capital Management owns over 45 million shares of Oracle Corporation (NYSE:ORCL) and Ken Fisher’s Fisher Asset Management owns over 2.4 million shares of Amazon.com, Inc. (NASDAQ:AMZN).

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