Barron’s Tech Trader blog recently reported that Oracle stock dropped 1.7 percent following a downgrading from “Market Perform” to “Market Underperform” by JMP Securities‘ Patrick Walravens.
Walravens cited three key factors in his analysis:
- Competition from Amazon Web Services and penetration into key verticals once considered impenetrable Oracle fortresses
- Overly aggressive sales incentives for cloud, resulting in “behaviors that are not in the long term best interest of Oracle or its customers”
- New expense control measures, including a “Winter Break” whereby employees are mandated to take vacation days between Christmas and New Year’s
To anyone paying attention, these recent developments – and the downgrading of the stock – should come as no surprise. Back in April I commented on Oracle’s stated commitment to redefining its sales strategy from an aggressive commission focus to a more customer-oriented approach. At the time, I questioned whether the prevailing culture at Oracle would accept such a shift. That question was answered by the gossip-fest and key departures that followed Oracle’s June sales kick-off, when significant changes in the cloud vs. on-premise commissioning structure were announced. Common sense would suggest that this culture shift would be too much for a company that has always rewarded winners pretty well.
Clearly, AWS and others are at the gates and the walls are weakening. Put simply, alternatives to Oracle are now more widely available, better structured and more cost-effective.
Faced with this fundamental threat, you’d expect an equally fundamental and strategic response. Instead, Oracle continues to use compliance, software audits and really questionable customer “partnering” approaches to manage noise. What was once a sales and innovation machine has become Megatron – a self-serving entity with pretty lofty goals for domination. Here’s to hoping some of the Oracle genius returns as a sanity check.
