Oracle quarterly results disappoint Wall Street; shares fall

Tue Mar 18, 2014 7:54pm EDT
 
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By Noel Randewich

SAN FRANCISCO (Reuters) - Oracle Corp posted higher third-quarter revenue and profit that failed to satisfy investors looking for signs of a sustained turnaround and its shares fell about 4 percent.

Shareholders had grown more optimistic after Oracle's previous quarterly results, but still worried about slow IT spending and growing competition from smaller, nimble rivals.

On Tuesday, the company also forecast current-quarter results roughly in line with investors' targets.

Chief Financial Officer Safra Catz forecast fourth-quarter revenue growth of between 3 percent and 7 percent in constant dollars, equivalent to between $11.3 billion and $11.7 billion. Wall Street had expected $11.5 billion.

She told analysts on a conference call that she expected current quarter earnings of 92 cents to 99 cents per share, versus analysts' consensus estimate of about 96 cents. New software and sales and subscriptions should grow between zero and 10 percent, she said.

"They still have heavy lifting ahead in order to declare this a turnaround story," said Dan Ives, an analyst with FBR. "Investors need to see more. It continues to be a 'prove me' stock in the eyes of investors."

The company said new software sales and Internet-based software subscriptions in its fiscal third quarter ended February 28 rose 4 percent from the year-ago period.

The company had forecast that new software sales and subscriptions would be up between 2 percent and 12 percent in the current quarter. New software sales are scrutinized by investors because they generate high-margin, long-term maintenance contracts and are an important indicator of future profit.   Continued...

 
Oracle signage is seen outside Mocsone Center during Oracle OpenWorld 2012 in San Francisco, California in this October 1, 2012 file photograph. REUTERS/Stephen Lam/Files