Techs Midterm Outlook: Software
A return to healthy growth is proving ephemeral for significant segments of the software industry, prompting observers to wonder whether they'll ever see a return of robust sales and profits across the board.In mid-July, stock market analysts and computer industry pundits came to Oracle headquarters in Redwood City, Calif., seeking guidance on how the enterprise software market was going to grow during the rest of 2004. While Oracle Corp. was among the software companies that reported healthy sales and profit growth in the second half of 2004, other companies including archrival PeopleSoft Inc. as well as Siebel Systems Inc. reported lower sales and earnings. PeopleSoft in particular has blamed Oracles yearlong buyout effort as the main reason why PeopleSoft this week reported a 70 percent drop in earnings. The latest quarterly reports had analysts asking Oracle officials when the software market would fully recover from the collapse of the IT industry bubble of the late 90s.
"This is the recovery. Enjoy it," Oracle CEO Larry Ellison told them. The industry, he advised, would never again see the kind of growth experienced in the late 90s. "We are not going back to the lunacy of the bubble," Ellison said.