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Sales Force Turmoil Could Hurt Oracle Corporation's Q1 Results

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Oracle Corporation's (NYSE: ORCL) recent turmoil in its sales force raises questions about the company's fiscal first quarter results expected Thursday.

"Q1 is looking ugly, and I have concerns about Oracle's cloud strategy," an Oracle sales partner told the trade journal CRN last month.

Matthew Mills, head of North America sales at Oracle and a 21-year company veteran, quit last month, reportedly in a huff after getting turned down in his request for greater control over Oracle's application business.

Adrian Jones, who headed Oracle's Asia Pacific sales left in June in a lateral move to Symantec Corp.

Mills was Oracle's "top U.S. salesperson," MKM Partners' Kevin Buttigieg said in a note Wednesday.

Buttigieg said Mills request may have been shot down because of weak trends in the database business and suggests an "execution risk in the quarter."

Other senior sales managers jumping ship at Oracle recently include Anthony Fernicola, Judson Althoff, Mitch Breen, Patrick Dennis and Stephen Boyle, according to CRN.

Still, Buttigieg thinks first-quarter results will meet consensus views although the company's software segment could be hurt by personnel turmoil as well as its shift to subscriptions from licensing revenue.

Buttgierg rates the shares Neutral with a $44 target.

Wedbush's Steve Koenig is more sanguine about Oracle's short-term prospects. Meeting first-quarter expectations "doesn't look difficult," Koenig said.

Oracle's results" tend to be more sensitive to overall demand conditions than to category-specific dynamics," Koenig said, noting the company's widely diversified product line up.

But longer term, Koenig, who is Neutral on Oracles, said the company stands to loose market share in customer relations management products to Salesforce.com. Inc. and Workday Inc., while an industry shift to subscriptions from licensing will introduce greater price competition.

Oracle is expected to post earnings Thursday of $0.64 per share on revenue of $8.78 billion.

Oracle closed Wednesday nearly unchanged at $41.13 per share.

Latest Ratings for ORCL

DateFirmActionFromTo
Jun 2017ArgusUpgradesHoldBuy
Jun 2017WedbushUpgradesNeutralOutperform
Apr 2017BenchmarkInitiates Coverage OnBuy

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