Revenue Increase Helps Mark Hurd Tamp Down Questions About Oracle's Salesforce
During the company's quarterly conference call, he categorically denied that another reorganization was taking place.
"We don't have any salespeople changing territory, changing accounts. We're not reorg-ing anything. If anything, we're actually really happy with the model we're in," he said.
And he had the numbers behind him: On Wednesday, Oracle had its first beat-the-street quarter, after three whiffs in a row. That's a hopeful sign.
Changes to Oracle's North American sales force and/or its hardware unit were rumored to be quietly under way, Wall Street analyst Pat Walravens, director of technology research for JMP Securities told Business Insider earlier this week.
It's all part of a never-ending stream of stories from current and former salespeople complaining that Hurd's sales plan isn't working. (Oracle has a massive, thousands-strong salesforce, so it's not particularly surprising that some of them are grumblers.) About two years ago, Hurd began restructuring Oracle's legendary sales force, hiring thousands more sales people, shrinking territories and asking salespeople to specialize in particular products.
As Oracle CEO Larry Ellison described it on Wednesday's call:
"Mark has emphasized that we haven't made any changes and that's absolutely true. A while ago though, we decided we had to line up an HCM [Human Capital Management software] sales force directly against Workday. That's all they think about every day. We have another [team] that competes against Salesforce.com ... another team that focuses on SAP. "
Oracle is no longer hiring, Hurd said on Wednesday, and its sales team is fully staffed.
Revenue was up 2% from the year-ago quarter, to $9.28 billion. That's healthy but not stunning: All of it was from software license renewal contracts and product support contracts (which covers things like tech support). That revenue came from existing customers, not new software, cloud or hardware sales.
On the analyst call, CFO Safra Catz was asked if Oracle was going to continue to remain one of the most profitable tech companies ever. She said that depends on the sales force:
"What you can see in our numbers right now, year over year, the difference is that we've invested in sales capacity right now compared to last year, and we expect that to pay off."
Josh Olson, technology analyst for Edward Jones, told Business Insider that Oracle has about two more quarters to show that Hurd's overhaul is working.
"Oracle is right on cusp of a potential breakthrough, but keeps kind of teasing us," Olson said. "We've been looking for an inflection point and it keeps getting pushed out and pushed out. If we don't see it in the next few quarters, our concerns would be heightened."
Salespeople have told Business Insider that under Hurd's plan their territories are too small, and there are too many of them all hitting up the same customers. The revenue increase, however, suggests those criticisms may not be seeing the bigger picture.
Meanwhile, Oracle's management insists it's got a line-up of new products that enterprises are eager to buy, including new cloud computing products, new hardware designed to run its apps, and a new database, the 12c. The database market is Oracle's bread-and-butter. The 12c database was created for cloud computing and runs at "ungodly" speeds, as Ellison once described it.
"We've seen more interest in 12c than any database version in recent memory," Ellison said on Wednesday. He predicted that the company would see "very rapid uptake" in sales of this database in 2014 and 2015.
Olson says that if Oracle doesn't deliver on those promises and posts "another big miss" in its fourth quarter, the one that ends in June, that means the "rumors of the sales force being disgruntled" could be true. Or it could mean that enterprises are starting to use new, rival database technologies like Hadoop or noSQL databases.
Olson is bullish that Oracle will do well, and the changes in the sales force will pay off. Edward Jones has reiterated its buy rating for Oracle, he said.