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Oracle Profit Meets Estimate, Revenue Falls Short

Oracle Profit Meets Estimate, Revenue Falls Short
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9/20/2012 5:27 PM ET

Oracle Corp. (ORCL: Quote) said Thursday after the markets closed that its first quarter profit rose 11% from last year, helped by higher software sales and improved margins even as hardware revenues continued to decline.

The company's quarterly earnings per share, excluding items, came in line with analysts' expectations, but its quarterly revenue fell short of analysts' forecast.

Oracle shares are currently losing 0.56% in after hours trading after closing the day's regular trading session at $32.26, down 52 cents or 1.59%. The shares trade in a 52-week range of $24.91 to $33.81.

Oracle's total software revenues for the first quarter increased 4% year-over-year to $5.7 billion. New software licenses and cloud software subscriptions revenues rose 5% to $1.6 billion.

First quarter software license updates and product support revenues grew 3% year-over-year to $4.1 billion. Service revenues for the quarter fell 6% from last year at $1.1 billion.

Hardware systems revenues for the quarter fell 19% at $1.4 billion, with hardware systems products revenue down 24% and hardware systems support revenue down 11%.

"Exadata, Exalogic, Exalytics and our other engineered systems grew more than 100% in the quarter," said Oracle President, Mark Hurd. "For the full year, we expect to double engineered systems sales to well over $1 billion. Oracle's new cloud business is also approaching a $1 billion annual run rate. These two businesses will drive Oracle's growth for years to come."

"A little more than a week from now we will announce lots of enhancements to the Oracle Cloud," said Oracle CEO, Larry Ellison. "There are more CRM, ERP and HCM applications as a service, and more Oracle database, Java and social network platform services."

Oracle's acquisition-led growth strategy continues to pay dividends. The company has acquired more than 70 companies since 2005. Of late, Oracle has set its eyes on cloud-based software firms. In January, the company completed the acquisition of RightNow Technologies, Inc. for $1.5 billion in an effort to offer a broader range of cloud solutions to its customers. The company completed its $1.9 billion acquisition of Taleo Corp. in April. Oracle has recently signed a deal to buy SelectMinds.

For the first quarter ended August 31, 2012, Redwood Shores, California-based Oracle reported net income of $2.0 billion or $0.41 per share, compared to $1.8 billion or $0.36 per share for the year-ago quarter.

Excluding items, adjusted net income for the first quarter was $2.6 billion or $0.53 per share, compared to $2.5 billion or $0.48 per share in the prior year quarter.

On average, 40 analysts polled by Thomson Reuters expected the company to earn $0.53 per share for the first quarter. Analysts' estimates typically exclude special items.

Operating margin for quarter improved to 35% from 32% a year earlier, while adjusted operating margin grew to 44% from 42% last year.

Total revenue for the first quarter fell 2% to $8.18 billion from $8.37 billion a year ago, while adjusted revenue for the quarter also fell 2% to $8.21 billion from $8.40 billion last year. Thirty-seven analysts had a consensus revenue estimate of $8.42 billion for the first quarter.

Without the impact of a stronger U.S. dollar, first quarter revenue would have been up 3% and earnings per share would have been up 24%, the company said.

Oracle also declared a quarterly cash dividend of $0.06 per share, payable on November 2 to shareholders of record on October 12.

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by RTT Staff Writer

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