Tags: Oracle | Sales | Profit | Growth

Oracle Sales, Profit Miss Estimates as Growth Slows

Thursday, 19 June 2014 05:22 PM

Oracle Corp.’s profit and sales fell short of analysts’ estimates in the fiscal fourth quarter, as Salesforce.com Inc. and other cloud-computing rivals lured customers away. The shares fell in extended trading after the news Thursday.

Profit before certain costs was 92 cents a share in the period that ended May 31 on revenue of $11.3 billion, the company said in a statement. On average, analysts projected profit of 96 cents and $11.5 billion in sales, according to data compiled by Bloomberg. The company has posted sales growth of less than 5 percent for the past 11 quarters.

The database and business-software maker, which has relied on acquisitions to fuel growth, has seen the benefits of those deals peter out. Chief Executive Officer Larry Ellison is nearing a deal to buy Micros Systems Inc. for more than $5 billion, according to people familiar with the matter, and he’s also seeking to jump-start growth by remaking Oracle into a cloud provider to win back corporate customers adopting programs delivered via the Internet.

“This is a shocker for investors who were expecting a slight beat in the quarter — new license sales were weak and it’s quite clear the company has a lot of heavy lifting in front of it,” said Daniel Ives, an analyst at FBR Capital Markets & Co., who rates Oracle the equivalent of a buy. “Part of it is execution, part of it is product related.”

The shares of Redwood City, California-based Oracle fell as much as 8.7 percent in extended trading, and were down 6.8 percent at $39.63 at about 5:30 p.m. in New York. The stock declined less than 1 percent during the regular session to end at $42.51, leaving it up 11 percent this year.

Software Products

Net income in the fourth quarter fell 4.2 percent to $3.65 billion, or 80 cents a share. New software-license sales, a closely watched indicator of future revenue, was unchanged at $3.77 billion, the company said. Hardware systems sales rose 2.4 percent to $1.47 billion during the quarter.

Oracle and Micros, a provider of software for hotels and restaurants, are in exclusive talks, though the two sides could still fail to reach an agreement, said the people earlier this week, who asked not to be identified discussing a private matter.

The company has worked to catch up in cloud computing and to rebuild a sales force weakened by defections to rivals, said FBR’s Ives.

“It’s still a challenging information-technology spending environment, but if Oracle isn’t doing well it comes down to execution issues and a product strategy that isn’t yet seeing the near-term deal flow that investors would want,” Ives said.

Cloud Platform

Earlier this month, Oracle unveiled database software that takes advantage of large amounts of computer memory to speed data analysis and online commerce. The 12C in-memory database product will be available next month, the company said. Ives considers it the company’s most important product release in a decade and the underpinning of a new, cloud-focused Oracle.

“If 12C is successful it could really be a snowball effect that could be a major catalyst for the cloud product set across the company,” he said. “They are heading in the right direction on paper, but they need to execute.”

As part of Oracle’s shift to selling more cloud software, the company broke out revenue for its cloud infrastructure-as-a- service products, which allow companies to store and run applications on the Internet. The company said it had $128 million of sales in that category. In two other cloud categories combined, software-as-a-service and platform-as-a-service, the company said sales rose 25 percent to $322 million.

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Oracle Corp.'s profit and sales fell short of analysts' estimates in the fiscal fourth quarter, as Salesforce.com Inc. and other cloud-computing rivals lured customers away. The shares fell in extended trading after the news.
Oracle, Sales, Profit, Growth
Thursday, 19 June 2014 05:22 PM
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