Tag Archives: amzn

Salesforce.com, Workday Nip At Oracle Here; Microsoft, Amazon There

Enterprise software developers Workday ( WDAY ) and especially profitable Salesforce.com ( CRM ) have gotten this far without any love from software king Oracle ( ORCL ), so a little verbal swagger from Oracle’s executives this week isn’t going to stop them. But Oracle’s 40% growth in cloud software revenue to $735 million in its third quarter, with a promise of more in Q4 , can’t bode well for the smaller rivals. Accelerating cloud sales, mostly for software as a service (SaaS) and platform as a service (PaaS), were Oracle co-CEOs Safra Catz and Mark Hurd’s favorite topics in a post-earnings conference call with analysts Tuesday. Oracle’s cloud growth, while approaching Workday’s recent 43% sales growth rate, has already puffed Oracle’s cloud to more than double Workday’s total revenue of $323 million in Workday’s last quarter. More deceleration seems inevitable from Workday’s triple-digit growth as recently as 2013. As for Salesforce.com, its year over year sales growth has slowed to the 23%-29% range for six straight quarters, following 13 out of the prior 14 quarters of 31% to 38% growth. Analysts polled by Thomson Reuters put it on a 25% sales growth trajectory to $1.89 billion in the current quarter ending in April vs. 23% revenue growth in the year-ago quarter. Still, “competition from leading SaaS vendors such as Salesforce.com, Workday and others creates the risk that new customers will be tougher (for Oracle) to find and existing on-premise customers could move to different vendors when they shift to the cloud,” warned RBC Capital Markets analyst Matthew Hedberg in a research note issued Wednesday. “This was not a quarter to change the competitive concerns,” he summarized. Not to worry, suggests Oracle Executive Chairman Larry Ellison. In the Q3 earnings conference with analysts Tuesday, Ellison said: “Oracle is now selling more new SaaS and PaaS annually recurring cloud revenue than any other company in the world including Salesforce.com. We are growing much faster than Salesforce.com, more than twice as fast, because we sell into a lot more SaaS and PaaS markets than they do. We compete directly with Salesforce.com in every segment of the SaaS customer experience (CE) market including sales, service and marketing.” He went on to say: “But Oracle also competes in huge SaaS markets where Salesforce.com does not compete at all, such as ERP (enterprise resource planning) and HCM (human capital management). It took many years for Oracle to develop the most complete ERP suite in the cloud including Fusion Financials, procurement, supply chain, logistics, manufacturing and much, much more. That long effort is now paying off.” In the conference call, Bank of America Merrill Lynch analyst Kash Rangan, discussing the huge database software bulk of Oracle’s business, addressed Ellison by noting that Amazon ( AMZN ) Web Services “wants to go after your business.” “ Microsoft ( MSFT ) just announced a SQL server running on Linux,” Rangan continued, “and everybody seems to be . . . swapping out your Oracle license for their license. Why are they doing this, Larry? Is it just because the industry views Oracle as this big giant that is less flexible with pricing? Is that right, that the industry feels like they need to take you guys on? How should we be thinking of Oracle’s presence in the database market a few years from now, given these threats?” Ellison replied: “Well, our PaaS business grew at 150% this past quarter. I mean, it’s interesting that Microsoft is now offering SQL Server on Linux. But people want Oracle in the cloud. People have a huge investment in Oracle products. I mean, people are coming after us because we are by far the market leader in database. So, of course, Amazon, (if) they’re going to be in the database business too, is coming after us, and of course (if) Microsoft wants to be bigger in the database business, they have to come after us. We’re the biggest player. “We see our customers — literally millions of applications and millions of users of those applications built on top of the Oracle database — wanting to move those applications into the cloud and we do that very well. Our PaaS service is even easier to use and better than Oracle is on-premises.” Or, as Evercore ISI analyst Kirk Materne put it in his Wednesday research note: “With 310,000 on-premises database customers, the company sees an enormous potential TAM (total addressable market), as database customers continue to shift to the cloud.” Workday stock at midday was trading up about 3% near 72 in afternoon trading in the stock market today , 23% off its 52-week high set May 26 at 93.62 and about halfway back from its dive in January and early February to 49.5% below that high mark. Salesforce stock was flat near 73, just 12% off an all-time high 82.90 set Nov. 19. Oracle was up about 1.7% in afternoon trading Friday near 41, just 9% off its 52-week high of 45.24 touched June 17. Oracle stock carries a relatively weak IBD Composite Rating at 56, partly because of its 6% earnings shrinkage and overall 3% revenue slip to $9.01 billion in Q3 — as that fast growth in the cloud pulls sales and profitability away from its own legacy on-premises lines. That cloud revenue only amounted to 8% of Oracle’s total Q3 sales, up from 6% a year earlier. Workday carries a 50 Composite Rating and Salesforce.com stock an 83.    

How Will We Watch TV Next, And Will Apple Or Comcast Rule It?

Apple ( AAPL ) has the future of TV all wrong, says a Barclays analyst who follows the cable TV industry and who’s upbeat on Comcast ’s ( CMCSA ) X1 service platform. Apple, Alphabet ‘s ( GOOGL ) Google, Comcast and others are vying to be the gateway to entertainment, says Kannan Venkateshwar, a Barclays analyst, in the report. He expects a battle to unfold as both pay-TV companies and technology rivals aim to be the “aggregator of aggregators,” the one-stop shop consumers go to for all forms of content. Apple rolled out its fourth-generation TV hardware in late 2015, but it’s been stymied in content talks with media giants and has shelved plans, at least temporarily, for a web-based TV service. “According to Apple, television will become a collection of applications. We believe the world is likely to move in a different direction, with an aggregator of aggregators, which then directs traffic to all other apps,” Venkateshwar wrote in the report. “In our opinion, those that control the ‘last mile’ and the relationship with the consumer, like Comcast, are in a much better position to be the aggregator than technology platforms like Amazon ( AMZN ), Google or Apple.” In September 2015, Apple introduced new TV hardware, including a Siri-controlled remote control, and added an app store to the platform. “We believe the future of television is apps,” said Apple CEO Tim Cook. Pay-TV companies, though, may be poised to build up relationships with media and entertainment companies, speculates Venkateshwar. “Companies like Comcast are able to aggregate every stream of content used by a consumer (TV, DVR, video-on-demand, gaming, etc.) while technology platforms like Apple can only aggregate subscription VOD content,” he said. “While it may be difficult for companies like Comcast to compete with the likes of Apple on the metric of user experience, we think the resources being put behind the vision at present seem to be moving in the right direction, with the evolution of the X1 platform being a prime data point.” Comcast expects half of its 22 million video subscribers to be using X1 set-top boxes by the end of 2016. While X1 currently does not support a Netflix ( NFLX ) app, under Venkateshwar’s vision it would have to. The X1 entertainment platform provides access to live broadcast, on-demand video and DVR-stored content. In November, Comcast partnered with 30 broadcast and cable networks to bring short-form Web clips to X1 set-tops as part of its video-on-demand (VOD) lineup. IBD 50 company Alphabet gets a best-possible Composite Rating of 99 from IBD, looking at earnings growth, stock performance and a raft of other measures. Comcast has an 88, Amazon a 68 and Apple a 66. Image provided by Shutterstock .

Content Is King In The War For First Generation Virtual Reality

Nvidia ( NVDA )-powered virtual reality devices manufactured by HTC, Facebook ( FB )-owned Oculus, and Sony ( SNE ) dominated the Game Developers Conference this week in San Francisco. But software, not the hardware behind it, will likely determine if this new form of ingesting content will become the billion-dollar industry that is the source of dreams for developers at the show. “Content is going to be king,” Nvidia spokesman Bryan Del Rizzo told IBD in an interview on the GDC show floor. “And there’s much more than just games, there’s business applications.” Nvidia stock was down a fraction to 32.82 at the close Wednesday. The company has an IBD Composite Rating of 99, the highest possible. Facebook was down more than 1% to 111.02, and Sony was up 2.3% to 26.09. On Wednesday, Facebook-owned Oculus announced the names of the 30 titles that will be available for its Rift VR headset that starts shipping on March 28. Priced between $19 and $59, the selection includes traditional shoot-’em-up titles as well as several much-hyped “experiential” offerings. There are 11 more titles to be released in the future, though the company has not announced an exact date. Oculus will cost $599. When the price was first announced there was backlash from the gaming community which expected considerably less. In response, the company said it is not going to make a significant profit on the hardware — placing the burden for profit even further on the content that Facebook is able to bring to Oculus Rift. Meanwhile, HTC is going to market with 50 titles , but none of them will be exclusively available on its VR headset, called Vive, priced at $799. HTC did not immediately respond to a request for comment. E-commerce juggernaut Amazon.com ( AMZN ), Netflix ( NFLX ) and other content producers also are making VR plays, and exploring video opportunities. This week at the conference, Sony announced its own VR bet for the PlayStation console. Sony’s offering is priced below both its chief competitors at $399 — a $370 PlayStation 4 is required, plus several accessories — but will not get to market until October of this year. In its fiscal third-quarter earnings report to investors, the company said it had sold 37 million PlayStation 4 consoles since its launch in 2013. Though content may determine the industry’s future, the hardware it relies on — Nvidia’s graphics processing units generate the graphics — has never before been available to consumers. Of the PC-based VR options, Oculus Rift will hit the market first on March 28 — giving the Facebook-owned company a head start on HTC, which will hit the market sometime in April . Advanced Micro Devices ( AMD ) graphics cards also can be used to power VR headsets. “PCs will be the preeminent platform for VR,” says Del Rizzo. One issue for Sony is that the PlayStation 4 is aging. Several developers told IBD at the gaming conference that it could be a speed bump for bleeding-edge content. Sony declined to comment. Both Vive and Oculus Rift require top-of-the-line graphics hardware to run. Del Rizzo says that may generate more profits for the companies involved since gamers have a tendency to upgrade their graphics cards to ensure that they get the most out of the latest titles. Still, it’s too early to say VR will stick. There have been attempts to take VR mainstream in the past, notably in the 1990s, but they have failed — in large part because the hardware then was not as advanced as today. Now, at least with the devices from Sony and Oculus that IBD tested, the hardware appears to be able to deliver a palatable experience. The question becomes: Will developers and content creators produce offerings that will convince customers to open their wallets?