Lots of CIOs here at the InformationWeek 500 Conference have been scratching their heads about Oracle hiring Mark Hurd after its ouster of long-time president Charles Phillips, but beyond that drama Larry Ellison's company is just beginning to fully leverage the transformative potential of its Sun acquisition, according to analyst Jason Maynard of Wells Fargo.
We'll find out Thursday afternoon (Sept. 16) about Oracle's first-quarter results and Ellison will be sure to talk about ongoing momentum and growth from its purpose-built Exadata 2 system. And in spite of the hubbub over Hurd's arrival and Phillips' ouster, Oracle's expected to post solid results.
As Maynard writes in a research note, " We think Oracle is one the best plays on the data center transformation theme and can leverage the Sun acquisition to take a larger share of IT spend. We believe Oracle can gain share given its scale, proven execution, and ability to deliver purpose-built optimized systems.
"In our opinion, Oracle will be able to grow Sun profitability and continue expanding overall corporate margins and ultimately push the stock higher."
Setting stock-price appreciation aside, Maynard's analysis is important for CIOs because he's looking past the recent theatrics and probing the likelihood that Oracle's well-oiled acquisition machinery will deepen Oracle's penetration among existing clients and give it entre to new customers as well.
And in this next excerpt, feel free to swap out "investors" and insert "CIOs" for the proper context. Says Maynard, " Even with the recent price appreciation following the addition of Mark Hurd, Oracle's shares still only seem to embed a cyclical recovery in enterprise spending and discounts the potential Sun synergy and margin expansion.
"We believe the Sun deal will prove to be as transformational and ultimately as successful as the PeopleSoft acquisition.
"Oracle's highly engineered systems strategy reduces costs by eliminating unnecessary computing elements that can hinder performance and require additional indirect service costs," Maynard writes. And then he describes what he calls the company's "best in class execution":