According the suit, Ms. Blackburn’s superiors “instructed her to add millions of dollars in accruals to financial reports, with no concrete or foreseeable billing to support the numbers”.
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A former senior finance manager at Oracle has sued the company, claiming she was sacked in retaliation for complaining about improper accounting practices in Oracle’s cloud services business.
Raymond James analyst Michael Turits said in a note Thursday that Oracle clarified Blackburn’s position in a discussion with him.
“We are confident that all our cloud accounting is proper and correct”, Oracle spokesperson Deborah Hellinger said via email.
A Certified Public Accountant, Blackburn had received a positive performance review in August 2015, but in the following month her supervisors had “charted a course that veered from legal, ethical and company standards”.
The claim is that Oracle has broken anti-retaliation provisions of the federal Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Amazon first started reported financial results for its cloud unit, Amazon Web Services, in April 2015, but Microsoft with its Azure offering and Google Compute Engine don’t report cloud financial results separately. Oracle has a long history of suing anyone who goes after them. Her suit also led to a series of statements on Thursday by five law firms that are commencing investigations into possible securities fraud on behalf of shareholders, and some intend to file class-action lawsuits against Oracle.
The former senior finance manager contends that she foresaw what amounted to a chain reaction resulting from relatively small accounting entries. She could attain prosecution immunity and receive a percentage of damages charged to Oracle, if her status is approved and the company is found guilty. According to Turits, Blackburn “had no involvement with the external reporting of Oracle financials, including revenue”, instead working in a group that handled internal management reporting.
Oracle CEO Safra Catz said at the time: “Our cloud business is now in a hyper-growth phase”. In comparison, cloud revenue was $735 million, or 8 percent of the revenue, but grew by 40 percent. The older type of software still generates massive profits for Oracle. Gartner Inc., for example, claimed in a January report that most companies are reporting artificial cloud figures in their earnings reports.
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The HP lawsuit has been pending for years, but a jury trial started this week.
