*from www.bloomberg.com, Mar. 21, 2013 (To view original article click here.)
Take Away #1: Oracle Corp. (ORCL) shares fell the most since 2011 after the company reported sales and profit that missed analyst’s estimates.
Key Facts and Figures:
- Fiscal third-quarter profit excluding some items was 65 cents a share on adjusted sales of $8.97 billion, said the company.
- That compares with analyst’s average projection of profit of 66 cents on sales of $9.37 billion, according to Bloomberg.
- Oracle fell 8.5% to $32.72 at 9:36 a.m. in New York, and earlier touched $32.50 for the biggest intraday decline since Dec. 2011.
- Through yesterday, the stock had rallied 7.3% this year, compared with a 9.3% gain for the S&P 500 Index.
Take Away #2: CEO Larry Ellison is being stymied by customers switching to Internet-based cloud systems.
Key Facts and Figures:
- Switching to the cloud is curbing customer’s reliance on Oracle’s servers, databases and related programs.
- The shift to Web-based programs resulted in customers buying less hardware and software.
- Net income for the quarter ended February was little changed at $2.5 billion or 52 cents a share, compared with $2.5 billion, or 49 cents, a year earlier.
- New software license subscription sales fell 1.8% to $2.33 billion, compared to Barclay’s analyst Raimo Lenschow’s prediction of $2.55 billion.
- Hardware revenue including servers and storage gained in the 2010 acquisition of Sun Microsystems, declined 23% to $671 million.
- Wells Fargo Securities analyst Jason Maynard had projected sales of $783 million.
Take Away #3: The dip in revenue will likely be short lived and the company along with analysts forecast better numbers ahead.
Key Facts and Figures:
- For the current quarter, Oracle forecast profit of 85 cents to 91 cents a share, compared with analysts’ average projection of 88 cents.
- Adjusted revenue will be $10.8 billion to $11.4 billion in the fiscal fourth-quarter, CFO Safra Catz said.
- Analysts are predicting revenue of $11.5 billion.
- Catz said revenue fell last quarter because some large contracts were delayed. Many have already been signed in the current quarter, she said.
Take Away #4: Oracle’s hardware business continues to be negative and its applications business is facing competition from cloud service vendors.
Key Facts and Figures:
- Oracle’s hardware business has fallen short of expectations or only managed to meet the lowest estimates in nine of the last 10 quarters.
- Oracle forecast for the current quarter hardware product revenue will decline 13% to 23%.
- Oracle’s applications business is also taking a hit from rival vendors who sell their programs as cloud services, such as Salesforce.com Inc. and Workday Inc.
Take Away #5: Oracle’s cloud-services revenue is growing but remains small compared to the rest of Oracle’s business.
Key Facts and Figures:
- The company is doing better in head-to-head competition with Workday, said Ellison.
- Oracle is competing with SAP, Microsoft Corp. and a growing number of startups for a larger share of the cloud-software market.
- Oracle plans to release a new version of its 12c database software for running Web-based applications, later this year.
- To retain a core base of corporate customers switching from installed software to cloud services, Oracle last year bought cloud software companies Taleo Corp. and RightNow Technologies Inc.
Take Away #6: Much of Oracle’s growth in recent quarters has come from acquiring other companies and CEO Larry Ellison says Oracle will continue to seek acquisitions.
Key Facts and Figures:
- The company wants to boost, either by itself or through acquisition, sales to sectors like banking, retail and telecommunications, said Ellison.
- Oracle has spent more than $50 billion on more than 80 deals, fueling an expansion in sales and earnings, since the middle of the last decade.
- In February, the company said it agreed to buy Acme Packet Inc. for $2.1 billion, gaining networking hardware and software.
*To view original article from www.bloomberg.com click here.