Oracle Plunges on Third Quarter Misses

Michael Teague |

Oracle Corp, ORCL,The news that the software giant Oracle (ORCL) had missed revenue expectations sent the company’s shares plummeting in Thursday’s trading 8.26 percent to $32.81.

Late on Wednesday the company reported its fiscal third-quarter earnings that indicated both profits and sales numbers that had fallen short of analyst expectations.

Net income for Q3 came in at $0.65 per share on sales of $8.97 billion, against estimates of $0.66 per share on $9.37 billion.

On a conference call, co-president Safra Catz attributed the one-cent shortfall to a stronger dollar, and also seemed to pass a good portion of the blame onto the company’s sales reps, citing a “lack of urgency”.  Co-president Mark Hurd echoed this sentiment, noting that Oracle has hired over 4,000 sales reps over the last year and a half, saying “the problem was largely sales execution”.

With new software licenses and subscription sales falling 1.8 percent to $2.33 billion, against estimates of $2.55 billion, however, the company is having some difficulty with growing competition from cloud software service providers like Salesforce.com (CRM) and Workday (WDAY).  Other software providers like Microsoft (MSFT) have been experiencing the same problems with competition from web-based storage, and have had some difficulty in altering business models accordingly.

Revenue from hardware sales was also down a whole 23 percent from projections of $783 million to $671 million.  Net income remained stable at $2.5 billion, $0.52 cents per share, up from the same dollar amount and $0.49 cents per share on the prior year.

Catz also cited the postponement in Q3 of sizeable contracts, and reassured investors that these were already signed for the current quarter.

Today’s losses also come amid rumors that Blackstone Group (BX), who is considering a bid for Hewlett-Packard (HPQ), will try to peel off Oracle’s co-president Mark Hurd if it is successful in any counter bid it makes to Michael Dell and Silverlake Management LLC’s buyout offer.

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Companies

Symbol Name Price Change % Volume
BX The Blackstone Group L.P. Representing Limited Par 25.86 -0.29 -1.11 3,432,519
ORCL Oracle Corporation 38.50 -0.20 -0.52 19,120,264
CRM Salesforce.com Inc 68.41 -0.05 -0.07 15,967,649
VRNG Vringo Inc n/a n/a n/a n/a
WDAY Workday Inc. 71.40 -10.20 -12.50 23,153,938
HPQ HP Inc. 15.12 0.06 0.40 8,377,096
MSFT Microsoft Corporation 59.25 0.05 0.08 25,515,665

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