Could Oracle, though still very profitable, be reaching a tipping point in its near-40-year history, due to declining earnings? Some analysts and investors may be thinking along those lines following the company's Q4 2015 and end-of-fiscal-year earnings reports on June 17.
Overall, Oracle reported subpar earnings to close out its fiscal year, failing to reach Wall Street projections. The Redwood City, Calif.-based company reported fiscal fourth-quarter profits fell to $2.78 billion from $3.6 billion in the same period a year ago.
The company reported total quarterly revenue of $10.7 billion, which also missed analysts' projections.
For fiscal year 2015, total revenue was $38.2 billion, essentially unchanged from 2014. Software and cloud revenues totaled $29.5 billion, up 1 percent over the previous year. Cloud software-as-a-service and platform-as-a-service revenues came to $1.5 billion, up 32 percent, while cloud infrastructure-as-a-service revenues were $608 million, up 33 percent.
Total hardware system revenues were $5.2 billion, down 3 percent year over year.
In its press release, Oracle said some of its fiscal problems were "significantly impacted by the strengthening of the U.S. dollar compared to foreign currencies." In fact, the company said its total Q4 revenues, which were down about 5 percent, would have actually been up 3 percent increase if not for the stronger dollar.
But analysts believe that the currency exchange problem wasn't the main one.
"This report speaks to the headwinds Oracle is seeing in the field as their legacy database business is seeing slowing growth," Daniel Ives, an analyst at FBR Capital Markets, told Reuters. "While cloud has seen pockets of strength, overall, the excuses we see out of Oracle have continued to frustrate the Street."
Oracle is indeed gaining momentum in selling subscription-related infrastructure, middleware and applications. SaaS and PaaS saw 29 percent revenue growth to $416 million. However, the company recorded a 6 percent overall decrease in software -- on premises and cloud -- revenues.
"We sold an astonishing $426 million of new SaaS and PaaS annually recurring cloud subscription revenue in Q4," CEO Safra Catz said. "We expect our rapidly increasing cloud sales to quickly translate into significantly more revenue and profits."
Oracle is projecting a continued upswing in cloud-related products and services.
"We expect to book between $1.5 and $2.0 billion of new SaaS (software as a service) and PaaS (platform as a service) business this fiscal year," Chairman and CTO Larry Ellison said. "That means Oracle would sell more new SaaS and PaaS business than Salesforce.com plans to sell in their current fiscal year; the only remaining question is how much more."
Oracle was down 8 percent on June 18 at $41 a share, near a six-month low.