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Table of Contents
higher bad debt expenses. These fiscal 2015 expense increases were partially offset by fiscal 2015 expense decreases related to lower statutory obligation expenses
in the jurisdictions in which we operate and lower amortization of intangible assets.
In constant currency, total margin and margin as a percentage of revenues for this segment increased in fiscal 2015 as our total revenues increased at a faster rate
than our total expenses for this segment.
Hardware Business
Our hardware business consists of our hardware products segment and hardware support segment.
Hardware Products: Hardware products revenues are primarily generated from the sales of our Oracle Engineered Systems, computer server, storage,
networking, workstations and related devices and industry-specific hardware products. We market and sell our hardware products through our direct sales force and
indirect channels such as independent distributors and value-added resellers. Operating expenses associated with our hardware products include the cost of
hardware products, which consists of expenses for materials and labor used to produce these products by our internal manufacturing operations or by third-party
manufacturers, warranty expenses and the impact of periodic changes in inventory valuation, including the impact of inventory determined to be excess and
obsolete. Operating expenses associated with our hardware products also include sales and marketing expenses, which are largely personnel related and include
variable compensation earned by our sales force for the sales of our hardware products, and amortization of intangible assets.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2016 Actual Constant 2015 Actual Constant 2014
Hardware Products Revenues:
Americas $ 1,241 -17% -13% $ 1,492 -1% 1% $ 1,507
EMEA 721 -10% -1% 797 -5% 7% 834
Asia Pacific 509 -5% 1% 536 -16% -12% 635
Total revenues 2,471 -13% -7% 2,825 -5% 0% 2,976
Expenses:
Hardware products 1,364 -7% -1% 1,465 -3% 3% 1,516
Sales and marketing 898 -1% 6% 911 -8% -3% 991
Stock-based compensation 20 17% 17% 17 47% 47% 12
Amortization of intangible assets 149 -33% -33% 223 -19% -19% 274
Total expenses 2,431 -7% -1% 2,616 -6% -1% 2,793
Total Margin $ 40 -81% -80% $ 209 14% 19% $ 183
Total Margin % 2% 7% 6%
% Revenues by Geography:
Americas 50% 53% 51%
EMEA 29% 28% 28%
Asia Pacific 21% 19% 21%
Excluding stock-based compensation
Included as a component of ‘Amortization of Intangible Assets’ in our consolidated statements of operations
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