ORCL - Oracle

[boilermaker75]

http://www.reuters.com/article/2013/06/20/us-oralce-results-idUSBRE95J14H20130620

 

Down 8% pre market

 

Mr. Market is over reacting.

[Palantir]

We want moar dividends

[Guest hellsten]

Oracle buybacks have been well-timed:

Counter intuitively, aggregate share buyback activity had tracked the

performance of the stock market from 2005 into 2011, indicating that many companies were

repurchasing their shares at higher prices and decelerating purchases when their shares were cheap.

However, one of the few exceptions was Oracle. The company accelerated its buybacks and was one of

the five most active buyers of its own shares in both the calendar fourth quarter of 2008 and the

calendar first quarter of 2009. During that time, Oracle’s price-to-earnings ratio (“P/E”) averaged 15.6,

compared to the average ratio of 24.4 over the previous eleven quarters. Oracle subsequently slowed

its activity from mid-2009 to mid-2011, but then accelerated repurchases again after its P/E ratio fell

below 18 in late 2011. With a current P/E ratio of 16.1, Oracle remains one of the most active buyback

companies in the S&P 500. Over the trailing twelve-months, Oracle has repurchased $10.65 billion, the

sixth highest value in the S&P 500.

 

http://www.factset.com/websitefiles/PDFs/buyback/buyback_6.19.13

[cogitator99]

Anyone have an informed opinion of Larry Ellison as CEO?

[rpadebet]

Anyone have an informed opinion of Larry Ellison as CEO?

 

I worked for this company in my previous life. So I think I can provide some color (bias) from that perspective.

 

IMO Larry is a brilliant yet eccentric sort of individual. He is a visionary when it comes to his anticipations of the changes in the industry (ex: he saw the migration of enterprise services to the cloud much earlier than rest of the industry and took steps to protect and position the business for it). But it was always clear to the employees, for whom the business was being run. It is for Larry and no one else. He seems like a shrewd capital allocator when he wants to enrich himself as a shareholder (via dividend, buybacks etc ), but he always has maintained another stream of income via his executive role and pays himself handsomely through that (salary, options and bonus). As a shareholder you never know which Larry is going to show up in any particular year.

 

I felt Oracle is pretty much a one man show, kind of like how Apple was when Jobs was around. (they were best buddies from what I heard and read, to the extent that Steve Jobs was the official photographer at one of Larry's recent weddings!). It doesn't mean others around him are incompetent, there are quite a few smart people there, but he is definitely the most important man for the organization, more "equal" than the others.

[cogitator99]

Anyone have an informed opinion of Larry Ellison as CEO?

 

I worked for this company in my previous life. So I think I can provide some color (bias) from that perspective.

 

IMO Larry is a brilliant yet eccentric sort of individual. He is a visionary when it comes to his anticipations of the changes in the industry (ex: he saw the migration of enterprise services to the cloud much earlier than rest of the industry and took steps to protect and position the business for it). But it was always clear to the employees, for whom the business was being run. It is for Larry and no one else. He seems like a shrewd capital allocator when he wants to enrich himself as a shareholder (via dividend, buybacks etc ), but he always has maintained another stream of income via his executive role and pays himself handsomely through that (salary, options and bonus). As a shareholder you never know which Larry is going to show up in any particular year.

 

I felt Oracle is pretty much a one man show, kind of like how Apple was when Jobs was around. (they were best buddies from what I heard and read, to the extent that Steve Jobs was the official photographer at one of Larry's recent weddings!). It doesn't mean others around him are incompetent, there are quite a few smart people there, but he is definitely the most important man for the organization, more "equal" than the others.

 

Thanks for this view. Given that at current prices ORCL stock accounts for $37 bn of his wealth -- meaning the bulk of it -- do you think it would be accurate to presume that he will act in the company's best long-term interests?

 

It's clear that he's no Warren Buffett (who is?), but I'm guessing one of the reasons why ORCL's capital allocation has been reasonably good is because to a large extent, it really is Ellison's money in there. Point taken on how he pays himself quite a bit, but any annual income he receives from the company is a tiny sliver of what his equity is worth.

 

Do you think its logical to think of Ellison in these terms?

[giofranchi]

"Oracle Is Misunderstood and Fully Mispriced"

 

https://sumzero.com/headlines/technology_and_software/ORCL/196-negativity-around-oracles-business-unfounded-large-upside-awaits

 

 

giofranchi

[rpadebet]

Anyone have an informed opinion of Larry Ellison as CEO?

 

I worked for this company in my previous life. So I think I can provide some color (bias) from that perspective.

 

IMO Larry is a brilliant yet eccentric sort of individual. He is a visionary when it comes to his anticipations of the changes in the industry (ex: he saw the migration of enterprise services to the cloud much earlier than rest of the industry and took steps to protect and position the business for it). But it was always clear to the employees, for whom the business was being run. It is for Larry and no one else. He seems like a shrewd capital allocator when he wants to enrich himself as a shareholder (via dividend, buybacks etc ), but he always has maintained another stream of income via his executive role and pays himself handsomely through that (salary, options and bonus). As a shareholder you never know which Larry is going to show up in any particular year.

 

I felt Oracle is pretty much a one man show, kind of like how Apple was when Jobs was around. (they were best buddies from what I heard and read, to the extent that Steve Jobs was the official photographer at one of Larry's recent weddings!). It doesn't mean others around him are incompetent, there are quite a few smart people there, but he is definitely the most important man for the organization, more "equal" than the others.

 

Thanks for this view. Given that at current prices ORCL stock accounts for $37 bn of his wealth -- meaning the bulk of it -- do you think it would be accurate to presume that he will act in the company's best long-term interests?

 

It's clear that he's no Warren Buffett (who is?), but I'm guessing one of the reasons why ORCL's capital allocation has been reasonably good is because to a large extent, it really is Ellison's money in there. Point taken on how he pays himself quite a bit, but any annual income he receives from the company is a tiny sliver of what his equity is worth.

 

Do you think its logical to think of Ellison in these terms?

 

Of course he is going to do things which will enhance his net worth. There is no indication he wants to screw other minority shareholders. So assuming that he will work in your interest is a reasonable assumption.

 

But when there is a conflict of interest between other minority holders and himself, whenever that happens in future, it should not be a surprise what he will choose.

[rpadebet]

Anyone have an informed opinion of Larry Ellison as CEO?

 

I worked for this company in my previous life. So I think I can provide some color (bias) from that perspective.

 

IMO Larry is a brilliant yet eccentric sort of individual. He is a visionary when it comes to his anticipations of the changes in the industry (ex: he saw the migration of enterprise services to the cloud much earlier than rest of the industry and took steps to protect and position the business for it). But it was always clear to the employees, for whom the business was being run. It is for Larry and no one else. He seems like a shrewd capital allocator when he wants to enrich himself as a shareholder (via dividend, buybacks etc ), but he always has maintained another stream of income via his executive role and pays himself handsomely through that (salary, options and bonus). As a shareholder you never know which Larry is going to show up in any particular year.

 

I felt Oracle is pretty much a one man show, kind of like how Apple was when Jobs was around. (they were best buddies from what I heard and read, to the extent that Steve Jobs was the official photographer at one of Larry's recent weddings!). It doesn't mean others around him are incompetent, there are quite a few smart people there, but he is definitely the most important man for the organization, more "equal" than the others.

 

Thanks for this view. Given that at current prices ORCL stock accounts for $37 bn of his wealth -- meaning the bulk of it -- do you think it would be accurate to presume that he will act in the company's best long-term interests?

 

It's clear that he's no Warren Buffett (who is?), but I'm guessing one of the reasons why ORCL's capital allocation has been reasonably good is because to a large extent, it really is Ellison's money in there. Point taken on how he pays himself quite a bit, but any annual income he receives from the company is a tiny sliver of what his equity is worth.

 

Do you think its logical to think of Ellison in these terms?

 

Of course he is going to do things which will enhance his net worth. There is no indication he wants to screw other minority shareholders. So assuming that he will work in your interest is a reasonable assumption.

 

But when there is a conflict of interest between other minority holders and himself, whenever that happens in future, it should not be a surprise what he will choose.

 

One additional point to note is when he pays himself as shareholder he has to "share" the result with every one else proportionally. When he rewards himself as an executive, its 100% to him before anything accrues to the shareholders. This is one reason I am not a big fan of Chairman and CEO role being combined in some companies. There are positives to this in some cases but it is helpful to be mindful of the negatives as well.

[LC]

http://mashable.com/2013/10/05/mongodb-startup

[Guest valueInv]

http://mashable.com/2013/10/05/mongodb-startup

 

This is an additional threat for Oracle.

[cogitator99]

Anyone have an informed opinion of Larry Ellison as CEO?

 

I worked for this company in my previous life. So I think I can provide some color (bias) from that perspective.

 

IMO Larry is a brilliant yet eccentric sort of individual. He is a visionary when it comes to his anticipations of the changes in the industry (ex: he saw the migration of enterprise services to the cloud much earlier than rest of the industry and took steps to protect and position the business for it). But it was always clear to the employees, for whom the business was being run. It is for Larry and no one else. He seems like a shrewd capital allocator when he wants to enrich himself as a shareholder (via dividend, buybacks etc ), but he always has maintained another stream of income via his executive role and pays himself handsomely through that (salary, options and bonus). As a shareholder you never know which Larry is going to show up in any particular year.

 

I felt Oracle is pretty much a one man show, kind of like how Apple was when Jobs was around. (they were best buddies from what I heard and read, to the extent that Steve Jobs was the official photographer at one of Larry's recent weddings!). It doesn't mean others around him are incompetent, there are quite a few smart people there, but he is definitely the most important man for the organization, more "equal" than the others.

 

Thanks for this view. Given that at current prices ORCL stock accounts for $37 bn of his wealth -- meaning the bulk of it -- do you think it would be accurate to presume that he will act in the company's best long-term interests?

 

It's clear that he's no Warren Buffett (who is?), but I'm guessing one of the reasons why ORCL's capital allocation has been reasonably good is because to a large extent, it really is Ellison's money in there. Point taken on how he pays himself quite a bit, but any annual income he receives from the company is a tiny sliver of what his equity is worth.

 

Do you think its logical to think of Ellison in these terms?

 

Of course he is going to do things which will enhance his net worth. There is no indication he wants to screw other minority shareholders. So assuming that he will work in your interest is a reasonable assumption.

 

But when there is a conflict of interest between other minority holders and himself, whenever that happens in future, it should not be a surprise what he will choose.

 

One additional point to note is when he pays himself as shareholder he has to "share" the result with every one else proportionally. When he rewards himself as an executive, its 100% to him before anything accrues to the shareholders. This is one reason I am not a big fan of Chairman and CEO role being combined in some companies. There are positives to this in some cases but it is helpful to be mindful of the negatives as well.

 

Again, thanks. Though to that point, this is true of all managements...anything they pay themselves is 100% theirs, but good capital allocation is diffused among the various shareholders.

 

Still, in ORCL's case, since Ellison has $37 bn worth of stock, and in 2012 received $96 mn in "other compensation" according to Bloomberg, then his equity is ~385x his egregious annual compensation...

 

[cogitator99]

http://mashable.com/2013/10/05/mongodb-startup

 

This is an additional threat for Oracle.

 

Thanks for your posts, giofranchi, LC, valueinv. Appreciate it.

[Phaceliacapital]

Again, thanks. Though to that point, this is true of all managements...anything they pay themselves is 100% theirs, but good capital allocation is diffused among the various shareholders.

 

Still, in ORCL's case, since Ellison has $37 bn worth of stock, and in 2012 received $96 mn in "other compensation" according to Bloomberg, then his equity is ~385x his egregious annual compensation...

 

In the MOI book it is stated that you can consider management to be properly aligned when stock ownership is 6-7 times annual pay.

[Guest valueInv]

I hadn't thought of this:

 

http://feedproxy.google.com/~r/OmMalik/~3/uL12xy-7Lug/

 

Haven't looked at Hadoop yet.

[no_free_lunch]

With oracle I would be more concerned with cheaper alternatives, sql server and too an extent DB2, as well as the free alternatives especially PostgreSQL than Hadoop.

 

An interesting quote from the article:

 

Asked which legacy vendor is best poised to ride the Hadoop and greater big data wave, Lynch was quick to point to IBM. “I think that the best-positioned company is, in my opinion, by far IBM, because of the breadth of their offers and the ways that they can make money as this big data marketplace develops,” he said, noting its product range from databases up to BI applications and the billions it has spent acquiring and building new technologies.

[Guest valueInv]

With oracle I would be more concerned with cheaper alternatives, sql server and too an extent DB2, as well as the free alternatives especially PostgreSQL than Hadoop.

 

An interesting quote from the article:

 

Asked which legacy vendor is best poised to ride the Hadoop and greater big data wave, Lynch was quick to point to IBM. “I think that the best-positioned company is, in my opinion, by far IBM, because of the breadth of their offers and the ways that they can make money as this big data marketplace develops,” he said, noting its product range from databases up to BI applications and the billions it has spent acquiring and building new technologies.

 

There are also a ton of NoSQL rivals such as MongoDB and CouchBase that are gaining traction.

[FiveSigma]

Q214 Earnings are out:

 

http://www.oracle.com/us/corporate/investor-relations/financials/q2fy14-2087029.pdf

 

- Software revenues up 5% (in CC)

- SaaS bookings up 35%

- Hardware revenues up 2% (in CC)

- Operating income flat (in CC)

- Operating cash flows up 14%

- Cash EPS up 9% (in CC)

[FiveSigma]

Guidance from the call per SeekingAlpha:

 

- Oracle (ORCL) guides on its FQ2 CC (webcast) for 2%-6% Y/Y FQ3

revenue growth, and quarterly EPS of $0.68-$0.72. Those figures

are in-line with a consensus of 4.2% growth and $0.70.

 

- Software license/cloud subscription sales are expected to post 1%-11%

growth in FQ3 after declining 1% in FQ2. Hardware product sales growth

is expected to be in a range of -2% to +8%, better than FQ2's -3%.

 

- Oracle also notes its costly/high-margin engineered systems (Exadata,

Exalytics, etc.) now account for 30% of hardware product revenue.

Oracle needs engineered systems sales growth to remain healthy

to offset slumping sales of traditional SPARC/UNIX systems.

 

http://seekingalpha.com/currents/post/1472791

[Guest valueInv]

Hoping that it creates a selling opportunity tomorrow.

[rayfinkle]

FWIW having gone through a few oracle implementations in the day job, the process is incredibly painful, disruptive, and distracting to a business. But nonetheless CFO's for large companies seem unlikely to consider alternative platforms. Maybe this changes as a younger crop of finance leaders mature, but I've rarely seen such an entrenched company...switching costs are enormous!

[frommi]

FWIW having gone through a few oracle implementations in the day job, the process is incredibly painful, disruptive, and distracting to a business. But nonetheless CFO's for large companies seem unlikely to consider alternative platforms. Maybe this changes as a younger crop of finance leaders mature, but I've rarely seen such an entrenched company...switching costs are enormous!

 

I observed that its not very profitable to give customers perfect solutions. The ones who do this earn no money over longer timeframes and built no long term customer relationships. Oracle, Microsoft and IBM are very good at exploiting this tactic for good results. When Windows is perfect nobody needs updates and nobody upgrades to the next Windows, etc.

[Guest valueInv]

FWIW having gone through a few oracle implementations in the day job, the process is incredibly painful, disruptive, and distracting to a business. But nonetheless CFO's for large companies seem unlikely to consider alternative platforms. Maybe this changes as a younger crop of finance leaders mature, but I've rarely seen such an entrenched company...switching costs are enormous!

 

I observed that its not very profitable to give customers perfect solutions. The ones who do this earn no money over longer timeframes and built no long term customer relationships. Oracle, Microsoft and IBM are very good at exploiting this tactic for good results. When Windows is perfect nobody needs updates and nobody upgrades to the next Windows, etc.

 

Counterexample- Apple.

[frommi]

Counterexample- Apple.

 

We talk about this one in 10 years again.  ;D

[Palantir]

Apple makes a perfect product and never holds back features? Can I have what you're smoking?