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Oracle Continues to Build Cloud Portfolio

Posted on Thursday, Jan 3rd 2013

According to recent analyst reports, cloud computing will be a strong area of growth for technological investments. Gartner projects that software as a service (SaaS) and cloud-based business application services will grow at a compounded rate of 19% over the five-year period between 2011 to 2016 to $32.2 billion. IDC expects enterprise cloud application revenues to grow at a more aggressive pace of 24% annually to $67.3 billion by 2016 from $22.9 billion in 2011. Technology giant Oracle (Nasdaq:ORCL) is counting on such market growth to accelerate its own performance.

Oracle’s Financials

Oracle’s Q2 revenues grew 3% over the year to $9.1 billion, compared with the market’s expectations of $9.0 billion. EPS of $0.64 was also ahead of the Street’s target of $0.61 and reported growth of 12% over the year.

By segment, revenues from software services grew 10% to $6.64 billion, with software licenses and cloud software subscriptions up 17% to $2.38 billion and revenues from license updates and product support up 7% to $4.26 billion. As Oracle shifted its focus to software, hardware sales continued to decline. During the quarter, revenues from hardware services fell 5% to $1.12 billion, revenues from hardware systems products fell 23% to $734 million and from hardware systems support fell 6% to $587 million.

The company repurchased 96.1 million shares during the quarter for $3 billion.

For the current quarter, Oracle expects revenues of $9.1 billion-$9.5 billion with EPS of $0.64-$0.68. The Street projects revenues of $9.44 billion with EPS of $0.66.

Oracle’s Acquisitions

As part of its cloud computing focus, Oracle recently announced the acquisition of cloud-based automated marketing solutions provider Eloqua for $871 million. Eloqua is a leading player in the revenue performance management sector. Its offerings enable organizations to monitor marketing initiatives and identify prospective customers by analyzing online behavior and buying preferences. Eloqua reported revenues of $23.8 million in the third quarter of 2012. The acquisition should help Oracle improve its relationship marketing programs for their customer base.

Oracle also acquired a cloud-based analytics platform DataRaker. DataRaker’s platform enables utilities organizations to improve operational performance and customer service by leveraging the big data gathered from distributed smart meters and sensors. Oracle expects to integrate DataRaker’s cloud-based analytics with its Oracle Utilities solutions to offer improved decision-making capabilities to customers.

Earlier this quarter, Oracle announced the acquisition of Instantis, a provider of cloud-based and on-premise project portfolio management (PPM) solutions. Instantis’s offerings help IT departments, product development teams, and business process leaders manage multiple corporate initiatives and financial performance. Instantis’s products will be integrated with Oracle’s Primavera and Fusion Applications to enable customers to have access to a comprehensive set of cloud-based and on-premise enterprise project portfolio management solutions that will help organizations manage, track, and report on enterprise strategies.

The stock is trading at 52-week high levels of $34.69, with a market capitalization of $164.23 billion.

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