City of Sunrise Firefighters' Pension Fund, et al. v. Oracle Corporation, et al.
|Court:||United States District Court for the Northern District of California|
|Class Period:||03/15/2017 - 06/19/2018|
|Case Contacts:||John Rizio-Hamilton, Mark Lebovitch, Jonathan D. Uslaner, Abe Alexander, Julia Tebor|
This action asserts claims under Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934, and SEC Rule 10b-5 promulgated thereunder on behalf of a class of persons and entities who purchased or otherwise acquired shares in Oracle Corporation (“Oracle” or the “Company”) between March 15, 2017 and June 19, 2018, inclusive (the “Class Period”). Defendants include the Company and certain of the Company’s current and former senior executives (collectively, “Defendants”).
The Court appointed Union Asset Management Holding AG as Lead Plaintiff, and BLB&G as Lead Counsel, on December 21, 2018.
Oracle is one of the world’s largest software companies. Among other things, the Company offers both on-premises and cloud solutions to a variety of end users. Historically, Oracle’s revenues were driven by the sale of the Company’s on-premises software services, but those revenues stagnated in recent years, forcing Oracle to shift to cloud-based programs.
Throughout the Class Period, Defendants reported that Oracle’s cloud revenues were growing at extremely rapid rates, and repeatedly emphasized that the “hypergrowth” in Oracle’s all-important cloud business demonstrated that it had successfully pivoted its business model to cloud-based technology. In addition, Defendants attributed that growth to a variety of supposedly legitimate factors and initiatives, including that its “products are better” its “sales force is better” and its “ability to implement is better.” In truth, Oracle drove sales of cloud products in two ways: (i) by threatening its customers with very costly “audits” of their use of the Company’s non-cloud software unless the customers agreed to shift their business to Oracle’s cloud programs; and (ii) offering customers large discounts on on-premise products if they accepted short-term cloud contracts that they did not want and would likely not use. The use of such tactics concealed the lack of real demand for Oracle’s cloud services, making Oracle’s cloud growth unsustainable and ultimately driving away customers.
The truth was revealed starting on December 14, 2017, when the Company disclosed that cloud revenue growth had stagnated and forecasted significantly slower sales growth for its cloud business. On March 19, 2018, Oracle reported even slower cloud growth, heightening the market’s concern regarding Oracle’s cloud business. On June 14, 2018, JP Morgan issued a report indicating that it had performed a large-scale survey of Chief Information Officers and found that Oracle was highly unpopular due to its business tactics and the lack of value in its cloud products. Finally, on June 19, 2018, Oracle reported that it would no longer separately report financial results or guidance for its cloud business, decreasing transparency as to cloud revenue growth. As a result of these disclosures, the price of the Company’s stock declined significantly.
Lead Plaintiff filed its amended complaint on March 8, 2019 and Defendants filed a motion to dismiss on April 19, 2019. Lead Plaintiff filed its opposition on May 31, 2019, and Defendants filed their reply on June 21, 2019. Defendants have proposed a date of October 17, 2019 for oral argument on the motion to dismiss.
Other Cases of Interest
Northern District of Illinois John Rizio-Hamilton, Abe Alexander
Northern District of California, San Jose Division Jonathan D. Uslaner, Adam Hollander
Intuitive Surgical Inc.
Superior Court of the State of California, County of San Mateo David Wales, Mark Lebovitch, Edward G. Timlin
Virgin Media, Inc.
County of New York: Commercial Division Mark Lebovitch, Jeroen van Kwawegen
Twenty-First Century Fox, Inc.
Delaware Chancery Court Max W. Berger, Mark Lebovitch, David Wales, Rebecca E. Boon
Northern District of California, Oakland Division Mark Lebovitch, David Wales, Alla Zayenchik
Salix Pharmaceuticals, Ltd.
Southern District of New York Salvatore J. Graziano, John Rizio-Hamilton, Katherine M. Sinderson, Michael D. Blatchley, Adam Hollander
Delaware Court of Chancery Mark Lebovitch, Jeroen van Kwawegen, Edward G. Timlin
Restoration Hardware, Inc.
Northern District of California Jonathan D. Uslaner
Middle District of Florida Avi Josefson, Jonathan D. Uslaner