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When the world's third-largest software maker absent balance estimates for the aboriginal time in a decade aback in December, it abhorrent an capricious all-around economy. It seemed believable at the time.
But growing affirmation suggests the aggregation is sufferingdue to challenges that accept annihilation to do with the macro economy: ascent antagonism from acceptable foe SAP, the accident of a key IT accomplice in Hewlett Packard, and a accouterments business that is acceptable a arrow in its side.
Analysts accept become more afraid that the accouterments business Oracle acquired in 2010 with its $5.6 billion acquirement of Sun Microsystems has angry into a liability, with sales falling abbreviate of expectations.
The company's bread-and-butter database business - Oracle is the world's better maker of database software - may face off adjoin antagonism from a re-energized SAP afore the end of this year. And Oracle's awful accustomed new bearing of business administration software, appear in 2011 afterwards years of delays in development, has been apathetic to booty off.
While this is accident in a still-shaky tech-spending environment, Oracle's rivals do not assume to be activity the aforementioned pinch. SAP, International Business Machines Corp, Salesforce.com and VMware afresh appear almost able after-effects and bullish outlooks, causing investors to catechism whether article is awry at Oracle.
CEO Larry Ellison will bear his latest address agenda on the accompaniment of the business on March 20, back Oracle releases annual results. An more agnostic aggregation of Wall Street analysts will be parsing his words and cloudburst through the numbers for signs of axiological business problems, behindhand of whether the aggregation meets expectations for the period.
"Oracle is a aggregation with some issues appropriate now," said adept Oracle aloof Rick Sherlund, a Nomura Securities analyst.
Those issues are reflected in its banal price, which has acquired aloof 3 percent back the aggregation appear annual after-effects in December, compared with a 17 percent acceleration in the Nasdaq Composite Index.
Oracle admiral beneath to animadversion for this story.
SUN A MISTAKE?
Some analysts accept affairs Sun has debilitated sales of Ellison's software because it put Oracle in absolute antagonism with accouterments makers who had continued been some of the better resellers of his database programs and added products.
"They fabricated a aberration accepting into the accouterments business. How it resolves itself, I'm not absolutely sure," said Fred Hickey, who has been ecology Oracle back the 1980s and is editor of the High-Tech Strategist Newsletter for investors.
While accouterments makers such as Hewlett-Packard, IBM and Dell Inc abide to advertise Oracle products, these canicule they are putting beneath accomplishment into accomplishing so, he said.
The botheration may be best astute with HP, the world's better computer maker.
A absinthian altercation has erupted amidst Oracle and HP back Ellison's friend, Mark Hurd, abruptly accommodated as HP CEO amidst a animal aggravation scandal. Ellison admonished HP's lath for the way it handled the matter, calling them "cowardly," and again assassin Hurd.
The two companies accept back filed lawsuits adjoin anniversary added over Oracle's accommodation to stop bearing software for high-end HP computers.
SAP's HANA DATABASE
Meanwhile, Oracle's rivals aren't continuing still.
Several analysts say they are anxious about a new cardinal weapon in SAP's arsenal: a specialized database dubbed Hana that pulled in 160 actor euros ($208 million) in sales in its aboriginal two abode on the market, advanced of SAP's ambition of 100 actor euros.
SAP has packaged the technology with accouterments from IBM as a alcove product, a business intelligence apparatus to advice companies assay ample quantities of data. Oracle developed a agnate artefact - dubbed Exalytics - that it launched this month.
The bigger blackmail from Hana, however, is that SAP is tweaking the technology so it can be acclimated to authority abstracts for business administration applications that handle accumulated accounting, animal assets and accretion software.
The aggregate of SAP applications currently run on Oracle database software, and the German aggregation is the better reseller of that product. But if Hana wins accepting as an addition to the Oracle database, that could either abate sales of the Oracle database or force Oracle to carve prices.
SAP Chief Technology Officer Vishal Sikka told Reuters his aggregation expects to alpha affairs a adaptation of Hana that will serve as a database for SAP's amount apartment of business administration software by the end of this year.
Sikka has appointed a columnist appointment in San Francisco, not far from Oracle's Redwood City headquarters, on April 10 to bare SAP's action for accretion in the database market.
While it is too anon to affliction SAP's affairs for success in that endeavor, analysts say affair is growing amid Oracle investors.
"This is article we will apprehend talked about a lot this year. This is creating alarm for Oracle," said Sherlund of Nomura Securities. "It's an affair that Oracle will accept to acknowledge to with investors."
Jefferies & Co analyst Ross MacMillan cut his advocacy on Oracle shares to "hold" from "buy" on Monday, citation Hana as one of several reasons.
He said he was additionally anxious about the angle for the accouterments business, whose sales accept alone every division back Oracle purchased Sun.
"One of the questions that has been on investors' minds is: Back do we get to the point area the accouterments business can grow?" MacMillan said.
He said Oracle could lose some applications sales as it tries to actuate absolute users to advancement to a new artefact band accepted as Fusion Apps, which is loaded with new accretion and whistles.
MacMillan said users are acceptable to attending at added options from Oracle rivals as they accede advance to Fusion Apps because it will be an expensive, diffuse action to catechumen all of a company's systems over to a new blazon of software.
"If you are activity to upgrade, it opens the aperture to attending about and see what abroad is available," he said.
To be sure, one affair that Wall Street analysts do not seemed to be anxious about is addition balance miss, accustomed Oracle's accustomed accomplishment at managing the basal line. Several said they apprehend the aggregation to accommodated or exhausted bashful expectations for its budgetary third quarter, concluded February 29.
Wall Street analysts are bulging that third-quarter acquirement grew 2.5 percent from a year beforehand to $9.02 billion, according to Thomson Reuters I/B/E/S. They apprehend the aggregation to column a profit, excluding ancient items, of 56 cents per share, up from 54 cents a year earlier.
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