Oracle Results Miss Estimates

(RTTNews) - Oracle Corp. (ORCL) said Tuesday after the markets closed that its third quarter profit rose 2% from last year, as its software and hardware revenues both increased year-over-year.

However, the company's quarterly earnings per share, excluding items, came in below analysts' expectations as did its quarterly revenue.

"Oracle's Engineered Server Systems, including Exadata and SPARC SuperClusters, achieved over a 30% constant currency growth rate in the quarter, while throughout the industry traditional high-end server product lines are in steep decline," said Oracle CEO, Larry Ellison.

Oracle shares are currently losing 4.81% in after hours trading after closing the day's regular trading session at $38.84, up 62 cents or 1.62%. The shares trade in a 52-week range of $29.86 to $39.85.

Oracle has adopted an acquisition-led growth strategy. The company has acquired more than 71 companies since 2005. Of late, Oracle has set its eyes on cloud-based software firms.

However, Oracle' revenue growth has slowed down in the last few quarters, raising investor concern about the company's ability to transition from its traditional approach of licensing software to the so call cloud computing method.

Oracle's total software revenues for the third quarter increased 5% year-over-year to $7.0 billion, with new software licenses and cloud software subscriptions revenues up 4% at $2.4 billion.

Third quarter software license updates and product support revenues grew 5% year-over-year to $4.6 billion. Service revenues for the quarter fell 4% from last year at $1.0 billion.

Hardware systems revenues for the quarter rose 7% to $1.3 billion, with hardware systems products revenue up 8% and hardware systems support revenue up 5%.

"Sales of Oracle's Cloud Applications accelerated sharply in the quarter with bookings growth of over 60%," said Oracle President Mark Hurd. "Our quarterly Cloud Application revenue is now approaching $300 million."

For the third quarter ended February 28, 2014, Redwood Shores, California-based Oracle reported net income of $2.57 billion or $0.56 per share, compared to $2.50 billion or $0.52 per share for the year-ago quarter.

Excluding items, adjusted net income for the third quarter was $3.11 billion or $0.68 per share, compared to $3.11 billion or $0.65 per share in the prior year quarter.

On average, 33 analysts polled by Thomson Reuters expected the company to earn $0.70 per share for the third quarter. Analysts' estimates typically exclude special items.

Total revenue for the third quarter rose 4% to $9.31 billion from $8.96 billion a year ago, while total adjusted revenue also rose 4% to $9.32 billion from $8.97 billion last year. Thirty-one analysts had a consensus revenue estimate of $9.36 billion for the third quarter.

Without the impact of a stronger U.S. dollar and Venezuela's exchange loss, third quarter revenue would have been up 6% and adjusted earnings per share would have been up 8% at $0.71, the company said.

Oracle also declared a quarterly cash dividend of $0.12 per share, payable on April 29 to shareholders of record on April 8.