Wednesday, May 03, 2006

"Revenues are Good, Costs are Bad" and Other Business Myths

Just reading the first myth in "Revenues are Good, Costs are Bad" and Other Business Myths made me think of the struggle Oracle has with the Wall Street analysts who cover it. Oracle has two basic sources of revenue: new licenses and license renewals. New licenses are seen by Wall Street as more desirable since they represent revenue growth. But renewals are much more profitable because Oracle doesn't have to pay a salesman to drum up the bussiness.

Wall Street would also like to see more of Oracle's revenue growth come from its own products rather than from buying competators. But if Oracle can obtain customers more cheaply by buying other bussinesses, it's in the company's interest to do so. The same argument can be made about R&D spending versus buying other company's products.

1 comment:

chrisbrinick76629268 said...
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