Oracle President and CFO Safra Catz, addressing an investment-oriented crowd at the Wells Fargo Technology Summit in San Francisco on Wednesday, again defended Oracle's much-maligned third-quarter financial performance, reemphasizing what she has called sloppy sales execution, dismissing the soft financials as a typical Q3 phenomenon, and reassuring the audience with a wonky explanation of how conservatively the company accounts for deferred revenue.
Catz delivered her soliloquy with typical sarcasm and competitive barbs, topped with a defiant assurance ("mark my words") that as one of the most successful companies in the world, Oracle would soon find itself and its founder, Larry Ellison, championed on BusinessWeek's cover as "cool again," as it was more than a decade ago.
Let's hope print media lasts long enough to see the day.
To be cool again, Oracle must do much more than put this hiccup of a quarter behind it. "Sometimes we have 'Q3.'" Catz said, noting that Q1 and Q2 were pretty good. "And it was really 'Q3' this time … it gets a little messy every once in awhile." She admitted that the shortfall caught her by surprise.
Part of the market's skepticism has to do with a nagging disconnect between the company's exuberance about its latest innovations (Exa-systems, Fusion, cloud delivery platforms, the overall stack approach) and what the numbers suggest is a lack of customer exuberance for those products, even during good quarters.
Catz said repeatedly, and in various contexts, that Oracle is in transition. It has hired new sales teams, for instance. "We're not stopping hiring," she said, characterizing the ramp-up time as a nine-to-15-month process. "For the first three months, they're just looking for the men's room." But she didn't equivocate about the future, saying that sales productivity is increasing. Catz compared Oracle's salespeople to old-school Wall Street pros: "You eat what you kill," she said. "They produce because that's their job."
Catz also talked about an evolving Oracle sales model, built around more specialized teams (products rather than just territories) and more feet on the street. That approach is starting to work, Catz said. "It's not obvious that it's happening," she said. "It's not showing, but it will."
And then in her typically metaphorical way, Catz added: "It always reminds me of little kids, if you ever watch the way they grow. All of a sudden they get a little fat, then they grow up." Next year at this time, she said, prodded by Summit host Jason Maynard, Oracle will be "all grow'd up."
More transition is happening in Oracle's product line, thanks to $5 billion in annual R&D, new product launches and several acquisitions. For example, Oracle has finally started shipping its Fusion suite ("You call it Fusion ... maybe I'm old," Catz told Maynard. "I call it applications."), providing new cloud models for those applications, and new hardware architectures for processing big data (its Exa line). Oracle just announced additions to its Sparc product line, about which Catz said: "it's been a tough transition, to be honest."
To underscore the point, Catz gave a confusing explanation of Oracle's hardware numbers: In Q3, people didn't buy lots of hardware because they were waiting on the new stuff, she said, before adding that the new Sparc systems "will take a while to catch on."
The company's storage business is doing well, Catz said, and while Oracle is "becoming a nuisance [to competitors], it's not even close to being a real battle yet at all." Tape, she said, "is an old business, and that hasn't been going anywhere for a long time, and that kind of drags us down a smidge."
On the surface, Catz's honesty is refreshing. She admitted, as she has before, that Oracle is still No. 2 in enterprise applications behind SAP, and that the Sparc T5 and M5 will only "give IBM a run for their money."
Catz is also right to characterize Oracle as a company in transition. It has prospered for a long time on a set of products that are starting to feel traditional, even if they have been modernized. Those products remain vital to enterprise customers, for sure, but they aren't going to transform Larry and Oracle into cool again.
In going on the offensive, Catz came off as a bit defensive about what Oracle has done and too cavalier about what it's poised to do. "We have database, we have middleware, we have applications ... our market share is basically everybody else combined," Catz proclaimed. Probably.
She continued: "The underlying platform of most of these [cloud] companies ends up being Oracle ... or they have all come to Oracle to offer our database. How is it that all of these companies that are theoretically competing with you are basically stalking you to have your product on their cloud?" Damn good question.
"On premises: it's not a dirty word," Catz said. True enough.
Before Catz turned to face Maynard for his questions, she said: "I don't know what they are, but I know my answers already." She was joking, but in hindsight an irony blossoms.
If Oracle wants to be cool again, it must do more than rev up the growth numbers. It has been there and done that. Instead, it needs to deliver on its promise of building the so-called customer experience platform.
Oracle is swinging for the fences with its big data and in-memory offerings, and it has been quickly and loudly acquiring the pieces for end-to-end social relationship management, from RightNow to Vitrue to Collective Intellect to its most interesting puzzle piece, marketing automation software vendor Eloqua. The potential is stunning.
In the next year, Oracle's numbers need to start reflecting customer uptake. Oracle needs to pull the pieces together, not just into an interesting story, but an integrated platform.
In the next year, Oracle needs to get all grow'd up. And that would most definitely be cool.
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