Dallas, Texas 12/16/2013 (FINANCIALSTRENDS) – Oracle Corporation (NYSE:ORCL) is a $154 billion market capped IT vendor which has positioned itself as a vendor of hardware, software and application provider to the enterprise space. The stock of the maker of enterprise software has been facing rough weather in the run up to its 2Q operations earnings release slated for next month. The stock shed close to 5.06 percent in the past 30 days of trading and an equally disturbing 6.34 percent in the past one week of trading on the back of speculation of sluggish new license revenue and slowing down of its underperforming hardware business in the just concluded quarter.
Thanks to these concerns about Oracle Corporation (NYSE:ORCL) ability to up its hardware game rating agencies have been quick to downgrade the stock. The latest downgrade was announced by RBC Capital Markets which not only downgraded the stock to a Sector perform from earlier outperform, but also reduced the price target to $35 from previous $36.56 per share. In the last week of November, StandPoint Research has downgraded the stock to Hold from earlier Buy.
Morgan Stanley was the agency which had downgraded the stock to a hold earlier last month on the basis of the current headwinds Oracle Corporation (NYSE:ORCL) is facing in its attempt to move its business model from that of a on-premises perpetual licensing to that of a pay as you grow subscription model. Analysts are of the opinion that the bell weather IT firm is facing stiff push back from its customers on investing further in its costly perpetual licensing model, when they can go with the more economical “software as a service” and “infrastructure as a service” models which are being offered by its competition.
In addition to these challenges in its bread and butter business, Oracle Corporation (NYSE:ORCL) has been struggling to get its hardware business profitable ever since it completed the buyout of struggling hardware maker Sun Microsystems two years back.