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Posts Tagged ‘finance’

Oracle Sees 20% Earnings Growth

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Benjamin Pimentel, reporting for MarketWatch:

Catz, who is also Oracle’s chief financial officer, said the company still believes a 20% earnings per share growth is achievable, even as the company expands. “We are hiring aggressively,” she said. Oracle saw a 14% growth in adjusted earnings per share in its last quarter.

I’ve always thought Oracle’s broad position in the market is its biggest asset — its position is not only wide, but also very deep. It’s the metaphorical one-stop shop perfectly built for enterprise needs. It seems Laura Lederman (of William Blair & Company) agrees:

William Blair analyst Laura Lederman said in a note, “We believe that Oracle’s broad technology footprint is its greatest competitive advantage. The company’s multitude of acquisitions has made it more strategic to IT buyers — many customers are taking an Oracle-first approach.”

I feel Oracle wants to be to the enterprise market what Apple is to consumers. A smart company with tightly integrated, highly-performant products and cutting-edge software mated to custom hardware. Enterprise or consumer markets, it’s all about end user experience. Oracle can deliver that in the enterprise space.

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2012 IT Budgets, Salaries on the Rise

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Carolyn Duffy Maran, reporting for NetworkWorld:

The outlook for IT budgets is solid, with 83% of survey respondents reporting that their 2011 IT budget was greater than or equal to their 2010 IT budget. This figure compares to 48% reporting stable or growing IT budgets in 2009.

Similarly, 85% of IT executives are predicting that their 2012 IT budgets will be greater than or equal to their 2011 figures. Only 65% of respondents made this prediction two years ago.

Another positive indicator is that IT budget allocations will remain steady in 2012, with internal staff expected to receive the largest share of the pie at 37% of spending compared to 38% this year.

Also note the outlook on outsourcing, forever IT’s boogeyman in the closet:

The SIM survey indicated no plans by management to increase offshore outsourcing, which has been a fear among IT professionals over the years. CIOs reported that they spent only 2% of their 2011 IT budgets on offshore outsourcing and 3% on domestic outsourcing. For 2012, they are projecting the same level of investment for offshore and domestic outsourcing.

And finally, don’t underestimate this surprising finding regarding cloud computing spend:

One surprise finding was that CIOs are not planning to allocate a significant amount of their IT budgets to internal or external cloud computing services. Although cloud computing was listed as one of the top applications that CIOs are investing in during 2011, they are spending only a tiny amount of money in this area: an average of 6% of their 2011 IT budgets on internal cloud projects and 5% on external cloud efforts.

Emphasis mine. Interesting that despite all the marketing and the buzzworthiness of cloud computing, the pursestrings are still on hold. Maybe it’s a value realization thing — that cloud, while promising, can’t be presented to the C-level in terms of actual ROI yet? Maybe it’s the backlog of IT services that have been neglected over the past few years, so cloud is hot, but not as hot as things that have been on the to-do list for 24 months?

ERP salespeople, take note: there’s still unmet demand out there. Enterprise cloud/SaaS salespeople: your challenge is to prove that the cloud is now, the value is real and time time has come for private clouds.

What’s your take?

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Rob Delaney Bought Some US Stocks Last Week

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Delaney writes:

What I am saying is that I believe in me, and I believe in you and I believe in elbow grease, objectivity and history. Did you see the recession coming? Did it announce itself and tell you the date it would arrive? No, it did not. Nor will recovery. So quit whining. Pessimism is for losers.

So to paraphrase Warren Buffett, whose sterling, brick and mortar, brilliantly run, cash-rich company Berkshire Hathaway was ALSO downgraded by S&P in the past, “American stocks are on sale.” Why not pick some up? I did. And I’m a 34 year old, hard working husband and father who gives a **** about the country he lives in and doesn’t take orders from S&P, CNN, or Congress. I give them. And so do you.

Emphasis mine. It’s a blunt message, but one I think people could stand to remember right now.

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Dropbox Raising Massive Venture Round

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Sarah Lacy for TechCrunch:

The real news are the numbers we’re hearing from multiple sources close to the company. Dropbox is looking to raise between $200 million and $300 million according to these sources. In terms of valuation, thecompany has already had multiple offers at a valuation north of $2 billion range, and recently more informal discussions in the $8 billion-valuation range. Our sources expect the valuation to end up in the $5 billion to $10 billion range.

That’s quite a step up from its previous funding rounds which have totalled a tiny $7.2 million.

Great news for Dropbox.

Incidentally, if you need a cloud storage/syncing solution that’s fast, easy, secure and open to integrations with all sorts of incredible apps, you’re missing out if you don’t look at Dropbox.  I literally use it every single day to keep files accessible (and synced) across my Mac, iPhone, iPad and Windows 7 laptop.  How many tools do you really rely on in your daily use?  If you don’t use it already, Dropbox will become one of them.

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‘Old’ vs. ‘New’ Revenue for Enterprise Vendors

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Without getting academic about it, Vinnie Mirchandani breaks up technology markets into old and new, which mean, nutshelled, traditional and innovation-driven revenue, respectively.  I’ve often looked at it the same way; in fact, one of the reasons I’m linking to Vinnie’s post is because he articulated my thoughts better than I could.  Here it is in its entirety.  You should read it.

Key quip:

There is old revenue and new, innovation generated revenue. The poster child is Apple. The iPhone has gone from zero to half of Apple’s revenue in less than 4 years. When you add iPad, barely a year old, you get even more of revenue which is new, innovation generated.

Contrast this to SAP, Oracle, Verizon, IBM and so many other large technology vendors. SAP has been talking in-memory applications and its BYD SaaS product for almost 5 years now, and related revenue is less than 5%. Oracle has been talking Fusion apps for over 6 years and it only has 50 or so customers. IBM markets the heck out of its “Smarter Planet” projects, but most of its revenues come from decades old Lotus, Tivoli and other software and data centers that often go back to the Cold War times. Verizon spends a disproportionate amount of its advertising budget on its 4G LTE offerings, when that is less than 1% of its revenues. There are plenty more examples in techland.

It’s not for a lack of want that these lip-service vs. performance discrepancies exist; it’s for a lack of an encouraging corporate culture and the fact that these companies must perform quarter after quarter, so radical new behaviors (and sales force incentives) are very difficult.  When there are analyst targets to meet and compensation plans to fulfill, nobody is going to push the avant garde products and services unless the company culture specifically demands they do so.

Another key point by Mirchandani:

It takes an Apple (and historically Intel) to actively develop and launch new products, and not worry about cannibalizing older revenues.

Exactly right.  When Apple designed the iPhone and, later, the iPad, it knew full well that the iPod’s days were numbered.  Think about that.  The iPod – an iconic device if there ever was one – was certain to be massively cannibalized by new products.  Not just new products, mind you, but new products forging new markets.  How many companies would have the courage of their conviction to walk headlong into that algebra?  Not many.

Eventually, as the competitive landscape firms up as it relates to these next-gen products and services, companies will make the internal adjustments based on market pressures.  When that happens, you’ll start seeing the shift from ‘old’ revenue to ‘new.’  And, ironically, my money says the products responsible for the ‘old’ revenue get a new (albeit perhaps short) lease on life.  Why?  Innovation increases the luster of everything in the house.

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Questions To Ask Jim Balsillie Over Coffee

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Eric Jackson, writing for Forbes.com, on what questions he would ask RIM co-CEO Jim Balsille over a cup of coffee:

  1. Last month, when you reiterated your guidance that you cut yesterday, had you done any “confirmation” of the numbers beforehand?  Your excuse for cutting the guidance was because you had recently completed some “confirmation” process that led you to cut back.  Shouldn’t you have done that before your earnings call?
  2. If you did do confirmation before earnings, doesn’t that mean that orders from carriers and customers have fallen off a cliff in the last 4 weeks?  If so, that’s a really bad sign isn’t it?
  3. Do you know any examples of phone companies who see demand for their products which fall off dramatically and then suddenly bounce back when you release your new versions of your phones that you’ll show us on Monday?
  4. The new phones that you say carriers are so excited about which you’ll present on Monday – aren’t they based on your old operating system that people don’t like and not your new QNX operating system?
  5. The features you touted last night for your new phones were better battery life, a better browser, and better graphics for gaming.  Is someone going to buy a BlackBerry over an iPhone or Android phone because of your improved browser?  Is that what has been holding them back?  Also, for your games: I thought your PlayBook just ships with Tetris.  Are there going to be any other games I can play on the new BlackBerries that use your improved graphics?
  6. Your bullish analysts used to say “yes, the US business is dying but International is going to keep growing.” You seemed to be saying last night that demand is drying up in Latin America too.  Does that mean the US was a sign of what is to come for your future International growth?
  7. If you did such a poor job predicting your month out earnings 4 weeks ago, how can anyone trust your full-year guidance of $7.50 EPS?  And why didn’t you reduce your full-year guidance last night when you cut your quarterly earnings?  Your full-year guidance was back-end loaded before.  Now, it’s gigantically back-end loaded.
  8. Last September, you told analysts to “stay tuned” and “just wait” to see the new BlackBerry phones.  We waited and you shipped the Torch.  Last night, you said “wait until Monday” and “stay tuned” for your new phones.  Why should we believe this time will be any different?
  9. Even though your new phones may seem like a big improvement for you over the last BlackBerries, are you sure that real paying customers (not your employees and friends around you in Waterloo, Ontario) will be impressed?  After all, they’re not comparing your new phones to your old phones when making a purchase decision.  They’re comparing you to iPhone and Android.  How will your new phones compare to iPhone 5?
  10. Can you name any company where a dual-CEO structure has worked?

Tough – and relevant — questions.  Would make for a pretty tense cup of coffee, I’d imagine.

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Business Health Improving, but Not Fully Recovered

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CFO.com’s Alix Stuart: Business Failures Down, but Not Done:

Bankruptcy has been in the headlines recently, thanks to the high-profile Chapter 11 filings of companies such as gourmet-food retailer Harry & David and bookseller Borders. But business failures overall have been declining, according to the most recent data from Dun & Bradstreet. Formal bankruptcy filings in 2010 were down more than 5% from 2009, while a broader estimate of business failures fell about 13.5%.

That doesn’t mean the economy is out of the woods, though. The failure rate is still high in many industries, as is the percentage of delinquent payments, a leading indicator of bankruptcy risk.

“We’re seeing that the economy is improving, but there’s still a high degree of failure risk in the system,” says Andrew Lobsenz, senior vice president of global D&B risk-management solutions. If the recovery happens too slowly, “failure rates could kick back up rather quickly,” he warns.

Despite the tone of the article, the is good news.  (It’s all to easy to focus on big-name Chapter 11 filings and in the process ignore the larger trend).  The risk, obviously, is that the recovery needs to keep building momentum and not falter.  From everything we’re seeing and reading, things are coming along nicely, albeit slowly.

From where you sit, how is the the recovery progressing?  What are your experiences?

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Cisco CEO: ‘No Excuses’

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Cisco CEO John Chambers last week wrote a candid and public admission about the company’s recent struggles, many of which have done their fair share of damage to the stock price.

Chambers’ note was interesting in that it was refreshingly honest: a mea culpa taking full responsibility for the company’s performance.

That said, today we face a simple truth: we have disappointed our investors and we have confused our employees.  Bottom line, we have lost some of the credibility that is foundational to Cisco’s success – and we must earn it back. Our market is in transition, and our company is in transition.  And the time is right to define this transition for ourselves and our industry.  I understand this.  It’s time for focus.

The entire thing is a model for how CEOs should demonstrate leadership and the value of taking personal accountability.  Read the full letter here.

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Oracle Tops Profit Views, Sales Rise 37%

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From MarketWatch:

Oracle (ORCL 32.80, +0.25, +0.76%) said its third-quarter net income rose to $2.1 billion, or 41 cents a share, compared to $1.19 billion, or 23 cents a share, in the same period a year earlier. Revenue for the quarter ended Feb. 28 rose 37% to $8.76 billion. Excluding one-time items, Oracle said earnings for the quarter were 54 cents a share.

Analysts polled by FactSet Research had expected Oracle to report earnings excluding items of 50 cents a share, and $8.7 billion in revenue.

The most notable thing about this news is the fact that much of the quarter’s success was predicated on software sales to new corporate customers.  This isn’t maintenance stream stuffing; this is IT departments finally loosing the checkbooks and satisfying some (probably) longstanding requirements.

Also notable is Oracle’s side statement on whether or not the earthquake and tsunami in Japan will have any bearing on short-term future operations:

The Redwood Shores, Calif.-based company also raised its quarterly dividend, and said it doesn’t anticipate a significant negative impact on its business from the recent earthquake and tsunami in Japan — while posting a better-than-expected profit outlook for the current period.

Great news all around for Oracle.

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2010 Berkshire Hathaway Shareholder Letter from Warren Buffett

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Always a fantastic read:

Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential
is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective.

We are not natively smarter than we were when our country was founded nor do we work harder. But look around you and see a world beyond the dreams of any colonial citizen. Now, as in 1776, 1861, 1932 and 1941, America’s best days lie ahead.

The entire report is here (PDF).  If you read nothing else, read the beginning of the letter.

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