Strong results seen for Oracle

Oracle Corp. is expected to post strong gains in first-quarter profit and sales when it reports results next week, despite tough year-over-year comparisons and concerns about the impact of the credit crisis on the business software maker.

Analysts polled by Thomson Financial expect Oracle to post earnings excluding certain items of 21 cents a share, and $4.3 billion in revenue. That compares to earnings of 18 cents a share, and $3.7 billion in revenue in the same period a year earlier. Oracle is expected to report quarterly results Thursday.
The high expectations come even as Redwood Shores, Calif.-based Oracle's numbers for the period ended in August will be compared to a very strong quarter a year earlier, when the company beat analysts' expectations and sent its shares surging higher.
In addition, questions have been raised recently about potentially weakening demand for the software that Oracle sells to banks and other businesses, who have retrenched during an economic downturn.

Oracle has "enough irons in the fire to offset a tough compare" to last year's quarter, Bank of America analyst Kirk Materne said in a note released Wednesday. Materne's expectations for sales and profit are in line with those of other analysts, and he has a buy rating on the shares.
Oracle's products used by financial institutions that are suffering alongside the credit market include those developed by recent acquisition Hyperion Solutions. In addition, analysts wonder whether other companies affected by the crisis may also rein in software spending.
Materne said that while Oracle's first quarter results should not be impacted by the credit crisis, investors should pay special attention to the company's guidance, "to help gauge the impact of recent macro turmoil on enterprise spending."

"Any 'macro color' will be a focus," Materne said.

Pacific Crest Securities analyst Brendan Barnicle said in a note released last week that, "Our channel contacts continue to report that Oracle had a solid" first quarter. Barnicle has an outperform rating on the shares.

Barnicle said he was surprised to see no negative impact on Oracle's financial services software business from the credit crisis. "We did speak with some contacts who are concerned that the financial services vertical could be weak in the remainder of the year, but they had not seen weakness in" the first quarter, Barnicle said.

Of particular interest when Oracle announces results will be reported growth in sales of new software applications licenses, a closely-watched metric as the company moves further into applications to complement its traditional database software business.
In its fiscal fourth quarter, Oracle's reported 13% growth in applications license sales disappointed analysts and investors. See related column.

Oracle cited a difficult year-over-year comparison for the lackluster growth. Chief Executive Larry Ellison said at that time that he expects applications license revenue "to grow strongly" in the first quarter, compared to the period a year earlier.

Author: John Letzing @ MarketWatch.com

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Ubuntu comes knocking on Oracle's door

The Ubuntu Server needs increased support from independent software vendors and system builders.

"The acid test for Ubuntu Server is Oracle," Canonical chief executive Mark Shuttleworth told vnunet.com in an interview at the VMworld conference in San Francisco.

Ubuntu is best know for its desktop Linux distribution which Dell ships on its consumer Linux desktop PCs, but the group is seeing an increasing interest in its server version that was launched in 2005.

Certification for third party applications such as Oracle's database is considered critical for the continued growth of Canonical's support services. Firms that seek professional support typically also require that their software and hardware are certified to run the Linux distribution.

Ubuntu Server is different from Red Hat and Novell because the software isn't sold as a subscription with support. Support is available from Canonical, the project's corporate sponsor.

Increased vendor support could boost Ubuntu's overall credibility. Oracle's support for Linux in 1998 is considered a watershed moment in the history of the operating system. As the database is the most widely used, mission critical enterprise application available, its support instilled a new level of trust in the software.

The enterprise software giant might not be as eager to throw its weight behind Ubuntu, however. Oracle last year launched its Unbreakable Linux initiative, which is essentially a special Oracle distribution of the open source operating system. This renders Ubuntu a potential competitive threat.

Oracle might not be able to hold out for long however. Although Shuttleworth typified adoption rates as "early stage", he said that the software is penetr ating deeper into the enterprise.

Enterprises adoption of Ubuntu Server is following an adoption pattern typical to open source software. Technology enthusiast start experimenting at home, then deploy it on non-mission critical systems such as file and print servers. Ubuntu Sever is currently starting to move up the food chain in areas such as high performance computing.

The final missing piece is support from hardware vendors. Sun Microsystems is currently the only major system builder which certifies its hardware for Ubuntu. Shuttleworth however argued that Ubuntu can put firms in touch with the open source community. Red Hat and Novell, by comparison, position themselves as a platform provider that provides a one-stop-shop.

"We have to leverage our insight into how open source really works," said Shuttleworth.

"We don't see ourselves as the sole platform provider. We are leaner [than Red Hat or Novell]."

Novell and Red Hat for instance emphasise that they provide only one version of their software, which makes it easier for independent software vendors and hardware makers to support and certify their products.

Ubuntu addresses those needs by periodically freezing one of its releases and promising long term support for it. The first long term release version was release in June 2006, a second one is slated for release in April 2008.

Canonical offers commercial support for its software. But the majority of its revenues come from the creation of custom Linux distributions for use with embedded applications. It also creates 'gold disks' for firms that seek a customized Linux installation that they can install on a large number of servers or desktops. The company is furthermore in the process of developing a mobile distribution that will be sold to cellphone makers and on Tuesday unveiled a special distribution for use in virtual appliances.

Ubuntu Server further plans to compete against Red Hat and Novell by following a different development path.

Ubuntu is trying not to fall for the feature bloating trap, said Rick Clark, manager for Canonical's server team.

"We have to make sure that everything we put in there is appropriate," Clark told vnunet.com. "We can learn from Red Hat's mistakes."

Red Hat Enterprise Server for instance features a graphical user interface and mp3 player, two features that would appeal mostly to desktop users. Debian's packing structure, on which Ubuntu based, allows developers to leave out rarely used features, but make them available for automatic download if they are needed.

For the upcoming Gutsy gibbon release of Ubuntu Server meanwhile, developers are focussing on security and interoperability with Windows systems.

Due out on 18 October, the software will allow users to more easily connect to as Microsoft's Active Directory as well as the Lightweight Directory Access Protocol (LDAP), a standard that allows users to find sources on a network.

The software will also introduce App Armor, a technology that Clark claims is more secure the SELinux standard because it allows users to isolate processes. This for instance could prevent a hacker who targets the web server from gaining access to the customer database or other parts of the system.

Author: Tom Sanders @ vnunet.com

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Oracle, SAP Case Delayed Again

Oracle's suit against SAP alleging "corporate theft on a grand scale" is off to a bad start – before it even officially begins.

The suit, which has already seen one delay in the initial but crucial case management conference meeting, has been delayed yet again.

A statement released by SAP on its lawsuit Web site Sept. 11—the rescheduled date of the first joint conference, which was scheduled for Sept. 4—confirmed that "due to the unavailability of council" the meeting is postponed to Sept. 25.

The case management conference is the portion of a legal proceeding that enables both parties in a suit to briefly summarize their argument and make requests for how they would like to see the case proceed. In a joint Case Management statement filed with the court Aug. 28, SAP and Oracle requested vastly different procedures.

SAP, who is accused of illegally downloading Oracle support material through its TomorrowNow subsidiary that provides third-party support for Oracle applications, requested that the judge mandate an ADR (Alternative Dispute Resolution), which typically boils down to mediation between the two parties—and negates the need for a trial.

Oracle is requesting an 18-month discovery period followed by a 2009 jury trial.

Following the case management conference, the judge typically issues an order with his or her decision on matters such as trial date, ADR and discovery schedule, according to a statement released by SAP. The judge's ruling in the Sept. 25 case management conference—assuming it occurs then—could be an indication of which way this trial will go.

Should the judge rule in SAP's favor for mediation, the case might be dead in the water as far as Oracle's claims of massive corporate theft go. If, on the other hand, the judge rules to allow Oracle's requested 18-month discovery process, then it could very likely be an indication that there's substance to Oracle's claim.

It could also be an indication that the Department of Justice has found something in its separate investigation of Oracle's claims against SAP.

Oracle initially filed suit against SAP in March claiming that SAP, through TomorrowNow, unlawfully downloaded thousands of Oracle support documents. In June, it amended the suit to include copyright infringement and breach of contract claims that included allegations of illegal hacking on SAP's part.

In July SAP's CEO Henning Kagermann admitted that some employees at TomorrowNow had downloaded more support documentation than they were authorized for, but said that neither he nor others at SAP had knowledge of any wrong doing, or ever saw TomorrowNow's documentation.

Oracle's case against SAP will be heard by the Honorable Martin J. Jenkins, a judge with the United States District Court, Northern District of California, San Francisco Division.

Author: Renee Boucher Ferguson @ eWeek.com

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