Has Oracle Missed Out on Cloud Computing?

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Sept. 19 (Bloomberg) -- Peter Goldmacher, analyst at Cowen & Co. and Bloomberg Editor-At-Large Cory Johnson discuss Oracle issuing a weaker outlook for the remainder of the year as could-based rivals eat into its customer base. He speaks on Bloomberg Television’s “Market Makers.”

Peter cook -- is it fair to say that oracle is far beyond the cloud and struggling to catch up ? is that where the problem is?

Yes, i think that is the problem.

Oracle is a 24-year-old legacy technology vendor, and the cost of technology is getting pounded into the dirt.

And the ability for anyone to bring a new product to market quickly is better than it has ever been before.

It is a great environment for entrepreneurs.

That is compounded by the market, public and private markets, are telling them your priority is getting as big as you can as fast as you can.

We will find you and let you be unprofitable for a very long time.

Oracle throughout its history has been geared to fight conventional wars.

They know they can use there might and their muscle to outlast competitors and put pressure on them where they cannot impeach or be propped -- cannot compete or be profitable.

Now they are getting bogged down in a land war in asia that is completely unconventional.

You have salesf orce.com, which is a $4 billion gross revenue business, and it does not make money.

And that is what oracle is competing against.

Peter described him as a 25- year-old legacy company.

Is oracle the new microsoft question mark i love those metaphors.

He is dead on.

Talking about qe -- it does matter because it is driving, there are two things that play that are very macro.

Peter is exactly right.

All of these companies are being valued on revenue growth alone, which is ridiculous, but true.

You have companies like salesforce that does not make a dime in profits.

You have oracle growing at two percent year-over-year and that was one of the best quarters they put up in the last six.

Because in the macro environment, you do not have company spending money.

With all this qe, the stock market is going up, but it is not driving or progrowth.

Oracle is barely growing.

Companies are not spending money.

No one seems to care about companies like amazon or tesla or salesforce.

Larry ellison, when you look at his passion -- i watched your bloomberg west feature last night -- where is his passion right now?

With his company or the san francisco bay?

The key is really killing them in these races.

Look, oracle came up with some great egg ideas many years ago.

But it is a company that really changed from when they were a database company.

They had acquisition after acquisition.

They are really focused on enterprise software.

Long deployment.

The disastrous purchase that weighs on the company.

Hardware sales down your after year.

Quarter after quarter, the hardware business continues to shrink.

They have issues.

Is it just salesforce.com?

You talked about a number of smaller companies.

Is it also amazon, google, ibm, sap?

Are they also eating oracle's lunch in addition to the smaller vendors?

I look at hp and dell in this bucket of legacy guys being crushed by competition.

Amazon is absolutely destroying the server business.

What we are seeing is you can pick your area of technology and there is an aggressive low-cost competitor that does not have to make money.

Oracle specifically, it issalesforce.com.

It is workday.

It will be a $4 billion company next year.

That will not make money for a long time.

More importantly on the data management side, you have a lot of startups like these and they are selling and new generation of data technology.

And they are quicker.

The money is fast.

The guidance -- they launch a business on those databases in a couple weeks, not with a big deployment that requires many visits from the sales guys and the whole -- it is not a prophet of business, but nobody cares right now.

Peter and cory, will be find ourselves wanting to talk about oracle in the future the way we talk about big banks?

Maybe it could be broken up so it could be a more nimble competitor?

I think oracle has the juice of the big bang.

There are arguments about ibm -- i think they are more nimble, smaller competitors.

Peter, do you want to weigh in?

I think breaking up oracle would be a terrible idea.

What you have to appreciate about oracle is basic said, look, we know we are shrinking -- we are selling into a shrinking pie, but we want a bigger piece of that pie.

Even if we are feeling pricing pressure in the end markets, we will be selling more of that stuff.

People talk about breaking up microsoft.

That resonates a little bit more because microsoft has the gaming business and the cell phone business and the dust top business.

-- desktop business.

These are maybe not related.

But every single thing oracle sells is a sail into that i.t. department.

1.i think is very interesting and we will see play out over time is, i.t. is losing power . companies selling low-cost products like these new data management technologies do not have to sell into i.t. anymore.

We have got to run, peter.

I'm sorry.

Great to see you.

Our own bloomberg west editor-at-large cory johnson.

This text has been automatically generated. It may not be 100% accurate.


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