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Oracle Systems Corporation Was Founded Term Paper

However, in September of 1990 Oracle's bubble had burst. Not only had share prices plummeted from $28.375 to $8.125, but projected earnings were down from 50% to 25% for the following year; 30% from 50% for the following quarter. Lawsuits plagued the company, investors were weary and wary of misrepresentation and false fiscal reporting, and customers grew increasingly suspicious about Oracle's ability to live up to their technological promises and product innovations. For these reasons, the company did not have a clean bill of financial health by the end of 1990. 2. Since 1990, Oracle has remained an industry leader but its market share has declined significantly as competitors have risen to the occasion, taking advantage of Oracles diminished reputation since its peak in 1990. In fact, IBM has recently overtaken Oracle in the database software market (Gilbert 2002). The recent decline in Oracle's share price is directly related to revenue losses and the loss of its status as the DBMS leader. Investors shrink away from companies with declining revenues and may look elsewhere to invest in DBMS systems.

Underlying causes of Oracle's loss in both revenues and in market share can be attributed to similar issues that plagued the company in 1990. For example, if Oracle is still selling its database software on trial bases to consumers then auditors may remain unwilling to allow the projected profits from those potential sales. Projected sales from trial issues of software may never pan out to become actual sales. Furthermore, the loss of market leadership indicates that the company may not be investing enough into product development. Oracle may be disappointing its customers with a lack of feature-rich DBMS products and companies like IBM may have been able to sell more DBMS because of a more full-featured...

Although Oracle claims to have diversified, the company might not have diversified its product line enough to make up for loss of revenue or sales.
The layoffs, management restructuring problems, and lawsuits that caused the steep decline in share prices in 1990 may also be at the root of what is occurring today. Mismanagement and unethical practices will plague any company. Similarly, Oracle officers misreported earnings in 1990 and was sued on several occasions for fraud and misrepresentation. Investors might be wary and suspicious and therefore unwilling to invest further into Oracle.

Furthermore, Ellison announced in 1990 that the drop is share price was not a matter of concern because Oracle was more interested in "profitability and product quality" than "market share and sales growth," (p. 77). However, Oracle seems to be declining in overall profitability as well as in market share and sales growth, areas that Ellison claims to be concerned about. Furthermore, if Oracle is losing bids to industry stalwarts like IBM as well as to industry newbies, then the firm may not be living up to its potential as a leader in "product quality." One of the gripes that customers had with Oracle in 1990 was that the company was not living up to its promises in delivering new features for its DBMS. Perhaps IBM and other companies have hired new software development staff to edge Oracle out of its number one spot. Unless Oracle invests more money into technology advancement and software engineering, then consumers will remain disenchanted with what was once the industry giant. Oracle's consumers are mostly enterprise-level corporate consumers with large-scale accounts that firms like it can ill afford to lose. Unless Oracle diversifies further or changes its sales…

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Gilbert, Alorie. "Oracle Net Profit Down in Key Quarter." CNet. June 18, 2002. Retrieved Nov 4, 2005 at http://news.com.com/2100-1017-937126.html
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