Enterprise software maker Oracle Corp. (ORCL) is scheduled to announce first-quarter results after the market closes on Wednesday. On average, 27 analysts polled by Thomson Reuters expect the company to earn $0.30 per share for the quarter, while revenues are estimated to be $5.24 billion. Analysts' estimates typically exclude special items.
Redwood Shores, California-based Oracle is organized into two businesses: software and services. Software business consists of two operating segments, namely new software licenses, and software license updates and product support. The services business consists of three operating segments - consulting, On Demand and education.
Although technology spending has taken a hit due to the economic crisis, Oracle's bottom-line is expected to reflect the benefits of tight cost control and the weakening of the dollar in the later part of the quarter, as the company has a strong international presence.
In June, Oracle said its fourth quarter profit dropped about 7% from last year, as a stronger U.S. dollar ate into the company's sales and profit. The company reported GAAP net income of $1.89 billion or $0.38 pr share for the fourth quarter, compared to $2.04 billion or $0.39 per share for the year-ago quarter. The company's total GAAP revenues for the fourth quarter fell 5% to $6.86 billion from $7.24 billion generated a year ago.
Of late, there have been signs of a revival in the economy, which should benefit the company's sales. FBR Research said in a client note on Tuesday, '' We believe Oracle continued to execute well in a tough environment and what is typically a seasonally weak quarter, as our checks were pointing to a good close to the quarter as the company leveraged its broad product suite.''
The brokerage maintained its "Outperform" rating on the company's stock, saying that the firm expects Oracle to report good first-quarter results with possible earnings per share upside due to cost controls. The brokerage anticipates that Oracle will at least meet the analysts' consensus revenue estimate. As the dollar experienced depreciation in the second half of the quarter, the firm also thinks that currency headwinds could be milder than expected.
Oracle had an eventful second quarter. The company said last month that its chief executive Larry Ellison would only draw a base salary of $1 in fiscal 2010, down from $1 million in each of the three previous years. Oracle's executive compensation packages include a base salary, an annual cash bonus and stock options. A large part of Ellison's fortune is tied up in big ownership stake in the company, which he co-founded 32 years ago.
Oracle agreed in April to buy Sun Microsystems Inc. (JAVA) for $9.50 per share in cash with a total value of about $7.4 billion, or $5.6 billion net of Sun's cash and debt. International Business Machines Corp. (IBM) was reportedly pursuing Sun, but Oracle clinched the deal. Last month, the U.S. Department of Justice approved the deal and terminated the antitrust waiting period. However, the European Commission said on September 3 that it has opened an in-depth investigation under the EU Merger Regulation into the planned acquisition due to concerns regarding competition.
''The Commission's initial market investigation indicated that the proposed acquisition would raise serious doubts as to its compatibility with the Single Market because of competition concerns on the market for databases,'' the regulator said in a statement. The European Commission now has time until January 19, 2010 to take a final decision on whether the concentration would significantly impede effective competition within the European Economic Area or a substantial part of it.
The proposed transaction would bring together two major competitors in the market for databases. The three main competitors of proprietary databases - Oracle, IBM and Microsoft - control about 85% of the database market in terms of revenue. Oracle is the market leader in proprietary databases, while Sun's MySQL database product is the leading open source database. The proposed deal would lead to Oracle owning two key Sun software assets, Java programming language and Solaris operating system.
ORCL closed Tuesday's regular trade at $22.66, down $0.06 or 0.26%, on 24.79 million shares. For the past year, the stock traded in the range of $13.80-$22.95.
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