I’ve been in a period of quiet contemplation since Oracle posted bad quarterly results for the first time in… like ever. And the reaction from the markets was scathing. Stock went down 15% the day after and has slowly recovered – currently tracking at -11% since the results.
What’s even more interesting is there was a knock-on effect on other tech stocks. TIBCO was down at -11% and SAP at -6% on the same day – and they hadn’t done anything. TIBCO’s results were due the next day and SAP’s are due in mid January; the markets clearly believed that if stalwart Oracle had done badly, then presumably others would follow.
Let’s deal with TIBCO first; they posted fantastic results for Q4. 22% up on revenue. 31% up on profit. Innovation, success stories and all that; despite this, the stock is now only back up 1% above what it was before Oracle posted its results.
As for SAP, they posted blockbusting Q3 results and did the smart thing by keeping the full year advisory as it was. If they didn’t have a great Q4 then they would likely still hit the full year milestones – and if they had a great Q4 then they would smash them. Either way, investors would be happy.
I don’t have inside information on SAP’s results but Oracle blamed deal slippage. Some of the same seems to be visible across the enterprise IT space. From where I’m sitting, customers scrutinise where they spend money because they have to get value. If you’re a customer reading this – please do this. Take your time and ensure you spend it wisely – this way you will spend on the projects that help meet your strategic objectives. That can only be a good thing.
The worrying elephant in the room is further macro-economic trends We all know that the Euro is shafted. The UK economy is tightly linked to European exports so we are reliant on their – non-existant – buying power. The USA is reeling from the financial mess it has put itself in and only China is a huge buying force right now.
How much of the deal slippage can we attribute to the ailing global economy? Is everyone avoiding talking about it because they are afraid it might be true? And does this reflect on what might be a very tough economic market for 2012 and beyond?
We will see.