Can Oracle Win in the Cloud Space Against Amazon?

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Can Oracle Win in the Cloud Space Against Amazon?

By Shoshanna Delventhal | October 3, 2017 — 7:06 PM EDT

At Oracle Corp.’s (ORCL) annual OpenWorld conference, Chairman Larry Ellison focused his keynote speech on the tech giant’s new database, Oracle 18c, while spending a significant amount of time bashing Amazon.com Inc.’s (AMZN) rival product.

Amazon fired back at the Oracle co-founder with a representative of the e-commerce and cloud computing giant indicating that Ellison has “no facts, wild claims, and lots of bluster.” Yet some analysts on the Street are intrigued by Oracle’s new intelligent database service, which the chairman says he guarantees will cost half the price as Amazon’s Amazon Web Services (AWS). The 18c service will launch for data warehousing in December, with online transaction processing planned to be available next June. (See more: Oracle’s 10% Jump Is Just the Beginning: UBS)

Shares Could Surge 60%

Ellison and Oracle’s co-CEOs will only receive their stock awards—the bulk of their compensation packages—if they meet certain goals by 2020, including a boost in cloud revenues and the stock reaching $80 a share. For this to occur, ORCL would have to skyrocket more than 64% from its Tuesday closing price of $48.69.

Drexel Hamilton analyst Brian White is bullish on Oracle’s new cloud push, indicating that the tech titan will finally reap the benefits of its cloud investment, after the move has dragged down earnings-per-share (EPS) and sales. “During the keynote, Larry Ellison went through the results from six demos that clearly demonstrated that the Oracle 18c Autonomous Database was not only cheaper to use than Amazon but also much faster and more automated (thus saving labor costs),” wrote White.

Raymond James’ Michael Turits and Bank of America Merrill Lynch’s Kash Rangan also applauded the new service. Turits, who rates ORCL at outperform, called the announcement “an aggressive initiative to keep Oracle DB differentiated and price competitive in an increasingly fragmented database environment.” The BofA analyst, who maintains an $80 price target on ORCL, says EPS can reach $4 to $5 in fiscal 2020 if the company meets its target of $20 billion in cloud revenue. (See also: Oracle Hiring 1,000 Sales Reps in Cloud Push.)

 

Published at Tue, 03 Oct 2017 23:06:00 +0000

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