Oracle’s Short Term Gains In Software Might Have Long-Term Consequences

Oracle’s fiscal report for their first quarter earnings in 2013 reported two sides of a story: A respectable growth in software operations and a major decline in hardware business. The company gained US$8.18 billion in revenue, a 2% percent decline compared to last year’s report. Their GAAP net income increased to 11% to $2billion, while their net income for non-GAAP also went up by 6% earning $2.6 billion.

Oracles new software licenses and cloud software subscription for GAAP went up by 5% generating $1.6 billion, while Non-GAAP had an increase of 6% percent equivalent to $1.6 billion. Both GAAP and non-GAAP revenues totaled an amount of $4.1 billion up by 3%. Its hardware performance, however, proved to be a disaster losing $799 million dollars, a dramatic 24% revenue loss for hardware systems products.

Despite obvious losses by the company, Oracle had a $1 billion annual run rate for their new cloud software business, according to President Mark Hurd. The company gave more attention on enhancing cloud business by including CRM, ERP and HCM applications as new services along with other social network platform services.

Despite having additional revenue for this quarter, some experts predict that the company might have problems for the long term. Customers can lose interest in cloud systems and choose other companies as alternative options. Other competitors in the field have special promotions that can influence customers to switch brands.

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