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Will The Gap Between Legacy And Cloud Revenues Hurt Oracle Corporation?

  • Oracle's legacy business is declining in a slow bleed that must be stemmed.
  • Can cloud computing be that tourniquet? Indeed, can it be the cure?.
  • How long will it take for that to happen, and is this a good time to invest in Oracle?.


During this decade, a lot of companies have been forced to go through a transition period. Legacy businesses are dying and new growth drivers are taking their place. IBM (NYSE:IBM), Microsoft (NSDQ:MSFT) and Oracle (NYSE:ORCL) are just three that come to mind immediately.

IBM and Oracle probably have it the worst because of their unique predicament of being caught between their declining-too-fast hardware and software legacy businesses and their not-growing-fast-enough cloud divisions. Both are yet to prove to investors that there is a clear path to higher revenues and, thereby, to higher valuations.

Today, I’d like to talk about Oracle. Their core business was almost entirely dependent on the on-premise IT infrastructure model that nearly every company of scale employed before being introduced to the cloud. The whole world operated on that model, making Oracle the king of databases. They still are, but a growing Cloud IaaS (Infrastructure-as-a-Service) industry led by Amazon (NSDQ:AMZN), Microsoft and IBM are forcing Oracle to take a different stand.

The Oracle of Old

There was a time when Oracle CEO Larry Ellison ridiculed the very concept of cloud, calling it “gibberish.” In hindsight, why wouldn’t he? After all, he was talking about a new technology...