Mixed Financials and Cloud Buys

Adobe Corp. and Red Hat Inc. reported double-digit quarterly revenue gains while Oracle Corp. surprised analysts by announcing weak quarterly revenues. In other business news, Salesforce.com Inc. revealed it was acquiring 2Catalyze, Inc. (Rypple) while Allen Systems Group Inc., operating under its ASG Software Solutions brand said it was purchasing Atempo Inc.

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• Adobe reported record fourth quarter and fiscal 2011 year-end revenues. It had revenues of $1.1 billion for the quarter, up 14 percent from the same quarter a year earlier. On a GAAP basis net income stood at $174 million for the quarter, a 35 percent drop from the $269 million it earned in the previous year's quarter. The company also notched up total sales for the year of $4.2 billion, an increase of 11 percent compared with $3.8 billion in fiscal 2010. On a GAAP basis Adobe had a net income of $833 million for the year, a gain of seven percent from the previous year's $775 million. Meanwhile, Red Hat released its third quarter fiscal 2012 revenues. The company stated its revenues rose by 23 percent to $290 million from $236 million. Net income on a GAAP basis was $38 million, which was a 47 percent jump from the year ago's quarter when it earned $26 million. Subscription revenues for the quarter increased 24 percent year-over-year.  
• Oracle reported weaker than expected second quarter results. Total revenues for the quarter were $8.8 billion, up only two percent from the previous year's quarter of $8.6 billion. However, the company was able to show a 17 percent jump in GAAP net income from $1.9 billion to $2.2 billion. For the quarter the company saw its overall software revenues increase by seven percent, even though its new software licenses revenue for its database and middleware climbed by four percent while its application new software license revenues shrank by two percent. Hardware systems revenues were down 10 percent from previous year's quarter of $1.8 billion to $1.6 billion. Oracle saw its hardware system product sales shrink by 14 percent to less than $1 billion. Executives claimed Exadata sales grew in excess of 100 percent compared to last year.
• Salesforce.com announced it had acquired the human resources software company, Rypple, which offers a social platform for the workplace. The financial terms for the deal were not disclosed. Rypple is headquartered in Toronto, Canada and offers Facebook-like software for enterprises to help improve employee performance through social goals, continuous feedback and meaningful recognition. Rypple was founded in 2008 and has hundreds of customers including Facebook Inc., Mozilla and Rackspace Inc. Salesforce.com will rename the offering to Successforce. Meanwhile ASG revealed it purchased Atempo, a software company that provides archiving and backup software. The privately-held Atempo is headquartered in France. The company offers products such as Time Navigator and archive software Digital Archive. The backup software has deduplication and virtual server support, and extensions for continuous data protection (CDP) and near-CDP in remote and branch offices, and desktops and notebooks. The firm has more than 4,500 customers and 200 channel partners.

Experton Group believes the expanding trend for collaboration, social business and media and open exchanges is reflected in Adobe's and Red Hat's revenue growth. Both firms are well tuned to the market demands and are expanding their user bases as the market shifts toward mobility and social business and interactivity. In the meantime, it seems Oracle – with its closed proprietary ecosystem – has stumbled, as users are not buying into its world view in as large a numbers as needed. However, a trend of one quarter is not much of a trend. Nonetheless, Oracle's Sun hardware strategy has yet to gain much traction and the base shrinks each quarter. ASG bought Atempo to leverage its products into the cloud markets. ASG is not a market leader but the company has its following. It might prove to be a credible cloud player over time. On the other hand, Salesforce.com has added another credible player to its bullpen of offerings. Successforce should have a ready-made market with the current Salesforce.com customer base and could easily grow quite rapidly. IT executives using Oracle should be concerned that the company may take actions to shore up its revenues – actions that could negatively impact the corporate bottom line. Additionally, IT executives using Salesforce.com should consider Successforce as an alternative employee productivity option. Lastly, executives should be transforming their businesses by leveraging cloud, collaboration, and social business and media offerings.