A whole slew of market analysts are dropping oracle like a hot steaming hurd. The word is out on the street and Oracle's cloud bluff has been called. MH has been at the helm for 8 years and has done irreparable damage internally to the sales organization, the support organization and development organization heralding in a decade with no raises for anyone added with cost cutting and layoffs. The Moral inside Oracle has sunk to an all time low.
Customer frustration has mounted to a boiling point, and instead of addressing it Oracle executive leadership jeers the customers by telling them, I know you hate us... but you can't move off of us can you?
In the December 2017 earnings call, a concern analyst asked,
"Oracle has been maintaining share when we consider the entire database ecosystem, but we keep hearing competitors and surveys saying customers are moving off Oracle."
To this, Larry Ellison replied:
I'd like to answer that. Let me tell you who's not moving off of Oracle. A company you've heard of just give us another $50 million this quarter to buy Oracle database and other Oracle technology. That company is Amazon. They're not moving off of Oracle. SalesForce (CRM) isn't moving off of Oracle. Our competitors who have no reason to like us very much continue to invest in and run their entire business on Oracle. I don't know whose moving off of Oracle. Maybe Mark does, maybe Safra does, but Amazon, you'd think Amazon would really want to move.
It seems Oracle has no friends and is rapidly approaching a point of no return. It has no new markets, no new products and no compelling new offerings with any substance. Internally it has suffered a near decade of hemorrhaging good talent and replacing that talent with Millennials that lack loyalty. I can't blame the Millennials, but I can blame MH who has throughly ruined the company.
https://seekingalpha.com/amp/article/4200657-let-tell-moving-oracle
Summary
Oracle management believe that customers cannot move off of their proprietary database.
Amazon and Salesforce may leave Oracle by 2020 and 2023, setting a new precedence for Oracle migration.
CIO surveys suggests negative spending intentions with Oracle.
Oracle (ORCL) has a big problem: high-profile customers are moving off of its proprietary database. ORCL bulls and management seem to be unaware of, or in denial about, this trend. In this article, I will make a case for why this should be more of a "top of mind" risk for ORCL investors by focusing on the potential loss of two high-profile customers: Amazon (AMZN) and Salesforce.com (CRM).
Amazon: Rising Oracle Competitor
On August 1st, CNBC reported that Amazon plans to be completely off Oracle's proprietary database software by the first quarter of 2020. According to the source, Amazon has been moving off of Oracle for several years and that the full migration should be complete in 14-20 months. The migration is due to Oracle's inability to scale to meet Amazon's needs.
Concerns over customers leaving Oracle is not new, but management seems to be in denial or bluffing their position. Management bravado, in my view, is a disservice to shareholders who might be led to under-appreciate the risk of high-profile customers migrating away from Oracle. A complete Amazon migration off of Oracle onto its own cloud databases could be a catalyst for other companies that are thinking of doing the same (i.e. migrating to Amazon) and serve as a rude awakening to management. Amazon's symbolic importance as an Oracle customer is well understood by Larry Ellison, ORCL's founder and Chairman.
Salesforce: Roadmap to Open-Source Alternatives
The quote I shared above from ORCL's December 2017 earnings call also called out SalesForce as one of those customers would can't move off of Oracle. Less than a month after the call, on January 2nd 2018, The Information reported:
Salesforce has been developing an Oracle database replacement, code-named Sayonara, Japanese for "goodbye," and now is ready to deploy it internally, according to a former Salesforce employee with knowledge of the matter. Salesforce expects to be completely off Oracle by 2023, this person said...
Yet losing Amazon and Salesforce as customers could pose major problems for Oracle, as it could provide a roadmap for other large companies that also are looking to cut costs by jettisoning Oracle database software in favor of open-source database alternatives.
SalesForce has been working on gaining independence from Oracle since at least 2013, when it hired a key executive to lead the effort. In 2016, Fortune first reported on Project Sayonara, which "may be the source of reports over the past few years that Salesforce was considering switching from Oracle to the PostgreSQL, an open-source and less expensive database."
But its not just the customers, the analysts have turned against Oracle as well.
https://www.cnbc.com/2018/06/14/oracle-shares-drop-after-jp-morgan-downgrades-on-lost-business-to-amazon-and-microsoft.html
J.P. Morgan lowers its rating to neutral from overweight for Oracle shares, citing negative results in a tech spending survey of corporate executives.
The firm says companies are moving from Oracle software to Amazon and Microsoft platforms.
Published 8:12 AM ET Thu, 14 June 2018 Updated 4:03 PM ET Thu, 14 June 2018
Oracle is losing favor among technology buyers to leading cloud computing vendors, according to J.P. Morgan.
The firm lowered its rating to neutral from overweight for Oracle shares, citing negative results in a spending survey of chief information officers.
Oracle's "specific metrics in our large-scale CIO survey have arced over into negative territory, which makes us uncomfortable because the results of our CIO surveys over the years have been highly predictive," analyst Mark Murphy said in a note to clients Thursday. "Oracle spending intentions have only looked lukewarm in our CIO survey work in the recent past, but the data takes a dive in the current survey. … In our discussions, CIOs have clarified that they are migrating Oracle databases to Microsoft SQL Server, Amazon databases and PostgreSQL."
https://www.marketwatch.com/story/oracle-stock-falls-after-wedbush-downgrades-to-neutral-2018-06-20
Wedbush analyst Steve Koenig downgraded Oracle Corp. ORCL, +0.12% shares to neutral from outperform on Wednesday, following the company's latest earnings report. "We're stepping to the sidelines on Oracle, as we're less confident that the company can successfully navigate a transition to the cloud," Koenig wrote. "Oracle's issues likely go beyond execution: they appear more deeply rooted in more intense competition in the cloud, reliance on a perpetual model, and perhaps cultural inertia." He said that while Oracle beat expectations in the latest quarter, it likely missed its goals for cloud bookings. The company stopped breaking out its cloud business with the most recent numbers. Oracle shares are down 4.5% in premarket trading Wednesday, but they're up 0.9% over the past 12 months. The S&P 500 SPX, +0.24% has gained 13% in that time.
These downgrades in June after Q4 2018 results follow on the heels of down grades in March of 2018
https://www.marketwatch.com/story/oracles-stock-sinks-as-disappointing-results-prompt-analyst-downgrades-2018-03-20
Shares of Oracle Corp. ORCL, +0.12% sank 8.4% in premarket trade Tuesday, after the software company's fiscal third-quarter results prompted downgrades by Wall Street analysts. The company reported late Monday profit that beat expectations but sales that missed, amid disappointing growth in its cloud computing business. Stifel Nicolaus analyst Brad Reback cut his rating to hold, after being at buy since at least June 2015, saying the "lackluster" results come in face of strong results from other software companies, including Microsoft Corp. MSFT, -0.66% Salesforce.com Inc. CRM, +0.48% and Adobe Systems Inc. ADBE, +1.65% He said even Oracle's profit beat was driven largely by a lower-than-expected tax rate. KeyBanc Capital's Monika Garg downgraded Oracle to sector weight from overweight. Garg said the transition to the cloude is taking "much longer to play out" then expected, after a third-straight quarter that cloud results and guidance has disappointed, and as execution risk has increased given "larger cloud competitors are growing faster." The stock has rallied 14.9% over the past 12 months, while the technology-heavy Nasdaq 100 NDX, -0.08% has run up 26.8% and the S&P 500 SPX, +0.24% has gained 14.3%.
In my humble opinion Oracles Q1 2019 will set a precedent for a historic low for the entire year. FY 2019 may mark the first year of the Oracle stock free fall.