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Earnings Preview: Can Oracle Beat the Great Cloud Squeeze?

Oracle CEO Larry Ellison's biggest gamble to date was the purchase of Sun Microsystems in 2010, and while he was unable to monetize most of its open-source software assets, he has been able to tie its hardware, including network storage devices, closely to Oracle software, selling them profitably as a package.

With the passing of Steve Jobs and the retirement of Bill Gates, Ellison is the last of the 1980's swashbuckling tech CEOs, and he recently bought an airline that serves his private island in Hawaii, The Inquirer reported. Unlike his contemporaries, Ellison has also cleared up questions of succession, naming former Hewlett-Packard (HPQ - Get Report) CEO Mark Hurd as "co-president" in 2010.

This is the kind of stability analysts like, a company that is growing at a good clip, that understands where the future lies and has everything buttoned up tight.

But, as I say, that's not cloud. As I noted, cloud produces ruthless price competition and a serious profit squeeze. It's all about standards, about commodity pricing, about everything Oracle is not, especially with what Oracle calls cloud.

How long can Oracle maintain its cloud doubletalk and keep earnings growing in the face of real cloud's savings? We'll get a clue next week.



At the time of publication, the author was long IBM.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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