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Lawsuit by Whistleblower over Cloud Computing Hits Oracle


06/02/2016


Lawsuit by Whistleblower over Cloud Computing Hits Oracle
A former senior finance manager has sued Oracle Corp on Wednesday against her alleged termination over her complains against irregularities in the company.
The former senior finance manager has alleged in the suit that she was fired by the company because she had complained against the improper accounting practices that were allegedly going on in Oracle's cloud services business
 
Following the court case and the spreading the news in the media and the market, the shares of Oracle fell about 2.6 percent to $39.23 in after-hours trading.
 
The upper management at Oracle had allegedly tried to push the former executive, Svetlana Blackburn, to "fit square data into round holes" to make Oracle Cloud Services' results look better. The legal complaint by Blackburn was filed in the U.S. District Court in San Francisco.
 
"We don't agree with the allegations and intend to vigorously defend the matter," Oracle spokeswoman Deborah Hellinger said.
 
"With no concrete or foreseeable billing to support the numbers," Blackburn said her bosses instructed her to add millions of dollars of accruals for expected business. In the law suit she also alleged that the executives who were placed above her in the company hierarchy had themselves added accruals on their own.
 
Cloud computing where essentially software in servers in data centers accessible through the internet rather than traditional packaged software, has been a cause for dilemma for Oracle as is the case with many of the legacy software companies. the dilemma is whether to move to cloud computing even while massive profits for Oracle are still generated by the older type of software.
 
Despite generating $6.35 billion in revenue which comprised about 70 percent of total revenue for the quarter in the last quarter, Oracle's traditional on-premises software sales shrank slightly compared to the same period a year earlier. One the other hand while comprising just 8 percent of the total revenues of the company, its cloud services grew at 40 percent in the last quarter to generate revenues of $735 million.
 
Younger and smaller cloud-first companies such as Salesforce.com Inc, whose chief executive delights in mocking Oracle's cloud strategy, have exerted considerable pressure in terms of market share and revenues in recent times on the Redwood City, California-based company.
 
In a bid to gain market share in the cloud computing business, Oracle has invested aggressively in its cloud business over the last few years. The cloud business was in a "hyper-growth phase", said Safra Catz, Oracle's co-chief executive, in March.
 
One month after the alleged wrongdoing began and two months after she received a positive performance review, her employment was terminated on October 15, said Blackburn.
 
In the laws suit Blackburn alleged that Oracle had come to view her as "more of a roadblock than a team player who would blindly generate financial reports using improper bases in order to justify the bottom lines that her superiors demanded to see."
 
V.J. Chetty, a lawyer for Blackburn, declined additional comment.
The anti-retaliation provisions of the federal Sarbanes-Oxley corporate governance and Dodd-Frank financial-reform laws were also allegedly violated by Oracle according to Blackburn's lawsuit. It seeks punitive damages, double back pay and other remedies.
 
(Source:www.reuters.com)