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Oracle Hardware Revenues Decline as Cloud Grows

By Sean Michael Kerner (Send Email)
Posted December 17, 2015

There was a time when Oracle executives spent a lot of time on earnings calls talking about hardware. That wasn't the case during Oracle's second quarter fiscal 2016 financial call on December 16.

For the second quarter of its fiscal 2016 year, Oracle reported total revenues of $9.0 billion, for a six percent Oracleyear-over-year decline. Net income for the quarter was reported at $2.2 billion, down from the $2.5 billion reported for the second quarter of 2015.

Looking specifically at the product and services mix at Oracle, Hardware product revenue was reported at $573 million, for a 20 percent year-over-year decline. Oracle's hardware support revenues were reported at $550 million, for an 11 percent year-over-year decline.

Cloud Business Revenues Keep Rising

While Oracle's hardware business is falling deeper into the ground, its cloud business is headed further up into the sky. Oracle reported total cloud revenues of $649 million, which is a 26 percent year-over-year gain. Oracle's Infrastructure as a Service (IaaS) business generated $165 million in revenue for a 7 percent gain, but it's the Platform-as-a-Service (PaaS) and cloud software-as-a-service (SaaS) market where Oracle is growing fastest.

Oracle reported $484 in revenues for is cloud software and PaaS activities, up by 34 percent from the second quarter of 2015. Looking forward, Oracle CEO Safra Katz commented during her company's earnings call that projections for future SaaS and PaaS growth are also robust, with expected third quarter growth of between 49 and 53 percent.

IaaS revenue is projected to grow between 3 and 7 percent. In contrast, Oracle's overall revenue growth is forecast to grow in a range from zero to 3 percent for the third quarter.

"Oracle’s strategy is to differentiate our cloud products from our competitors," Oracle CTO Larry Ellison said on the earnings call. "In SaaS, we differentiate by delivering the industry’s most complete suite cloud applications."

Ellison added that Oracle has differentiated itself by making it effortless for customers to move their millions of existing Oracle databases and programs to Oracle's cloud with a push of a button.

"We now have a highly differentiated rapidly growing SaaS and PaaS businesses," Ellison said. "This coming year, we will deliver a number of innovations in infrastructure to service as well."

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

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