Who is Oracle Corporation?

Oracle corporation is a global technology company that develops computer software applications for businesses. It was established in 1977 and has a share price of $102.73 (mkt close, Jan. 05, 2024) and market cap of $282.40 billion. The CEO is Safra A. Catz. Oracle is based in Redwood Shores, California.

Oracle is famous for its Oracle database software and for its computer software such as Solaris and Java, which it acquired after it bought Sun Microsystems in 2010.

Early beginnings

The company was first called Software Development Laboratories when it was founded in 1977 by Larry Ellison and Bob Miner. The two computer programmers worked at the American electronics company Ampex Corporation and together with Ed Oates, Ellison’s supervisor at Ampex created what would later become known as Oracle corporation. The concept of the company originates in a research paper written by computer scientist Edgar F. Codd.

In the article the British-born writer explained a relational database model, which for Ellison and his Ampex colleagues, showed commercial potential. The approach involved the organisation of large amounts of data in such a way that they could be easily and efficiently stored and retrieved. The three of them took Codd’s data management theory and decided to develop and market a program based on it. The first commercial relational database program was released in 1979 and was called Oracle. It used Structured Query Language (SQL), and it quickly gained in popularity. The first to use it was the U.S. Air Force at Wright-Patterson Air Force Base in Ohio.

Oracle in 1982

Through its aggressive marketing, the company was renamed Oracle in 1982 after its leading product, and continued to grow throughout the 1980s. It went public in 1986. In 1987 Oracle became the biggest database management company in the world. However, a lot of the company’s growth depended on its multiple acquisitions of software companies. Some of the most popular ones from its history are the multibillion-dollar purchases of PeopleSoft (2005), Siebel (2006), BEA (2008), Sun Microsystems (2010), and NetSuite (2016).

Competition and restructuring

During the early 1990s, weak earnings forced the company to undergo restructuring, due to the growing competition in the database technology market. The Network Computer (NC) that the company developed was not as fully equipped as a standard personal computer and depended on computer servers for its data and software.

Internet

Oracle managed to grow with its development of products that were compatible with World Wide Web technologies. It became a leader in database technology with versions for different operating systems and for different types of computers from large mainframes to microcomputers. With the acquisition of Sun Microsystems, Oracle acquired Java and the operating system Solaris and the open-source database MySQL. In 2010, Oracle filed a multibillion-dollar lawsuit against Google, Inc., claiming that Google had illegally used elements of Java in its development of the Android operating system. In 2016, a jury found  that Google had not breached Oracle’s copyrights.

Oracle (ORCL) shares drop

On 11 December 2023, Oracle’s shares dropped more than 9% after the software company reported fiscal second-quarter revenue and quarterly revenue results that disappointed and came in below Wall Street expectations. Earnings per share came in at $1.34 vs. $1.32 per share that was expected. Revenue was at $12.94 billion, below the $13.05 billion that was anticipated. Revenue grew 5% year over year in the quarter, which ended 30 November 2023.  Net income increased 44% to $2.5 billion, or 89 cents per share, from $1.74 billion, or 63 cents a share, a year ago.

In regard to guidance, Oracle adjusted net income for the fiscal third quarter of $1.35 to $1.39 per share and 6% to 8% revenue growth. LSEG polled analysts who projected $1.37 in adjusted earnings per share and $13.34 billion in revenue, which indicates a 7.6% revenue growth.

Oracle’s revenue from cloud services and licence support reached $9.64 billion, up 12% and below some analysts’ consensus of $9.71 billion. The revenue from cloud and on-premises licences dropped 18% to $1.18 billion, which was lower than the $1.21 billion some analysts had projected. Services revenue missed consensus and came in at $1.37 billion, vs. the $1.40 billion consensus. Oracle highlighted that cloud infrastructure revenue rose $1.6 billion during the period, up 52%. Some of Oracle’s more prestigious clients included Elon Musk’s AI startup xAI, Halliburton and Samsung.

In a call with analysts, Oracle co-founder Larry Ellison explained that Musk’s artificial intelligence company requested more AI chips than Oracle could supply. The shortage of Nvidia’s graphics processing units led the company to work hard to address the issue. Oracle CEO Safra Catz also explained in the call that the company lacked capacity. As she said, the company “had to choose between building something small and recognising revenue in the quarter, or going ahead with a larger buildout and waiting for capacity to become available.”

Oracle’s cloud business grew and announced that its database software will be available on Microsoft’s Azure public cloud. In the next few months, the company will turn on 20 data centres connected with Azure. Ellison said that he anticipates the OCI (Oracle Cloud Infrastructure) growth rate to remain above 50% for a few years. Another notable development in the quarter was Oracle’s NetSuite division’s acquisition of Australian company Next Technik. For 2023, Oracle shares rose by 41%, outperforming the S&P 500 index, which gained 20% during the same period.

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