Oracle Turns in Mixed-Bag Earnings Report

While the revenue total fell $100 million below Oracle's own sales forecast of $8.47 billion, some analysts saw good news in the big picture.

Oracle on Sept. 18 filed a mixed quarterly earnings report with the U.S. Securities and Exchange Commission, showing good profit growth yet falling short for a third straight quarter of meeting Wall Street analysts' expectations.

Nonetheless, the co-presidents of the Redwood City, Calif.-based full-service IT hardware and software provider, Safra Catz and Mark Hurd, said it is seeing improvement in several markets.

Oracle cleared $2.19 billion in the first quarter of the 2014 fiscal year, a respectable 8 percent increase over the same period a year ago. That number gave shareholders a solid 47 cents per share.

Total revenue was $8.37 billion, up a modest 4 percent over the year-ago period and exceeding Wall Street projections by about 3 cents per share.

While the revenue total fell $100 million below Oracle's own sales forecast of $8.47 billion, some analysts saw good news in the big picture.

"We would characterize this quarter as a sigh of relief, given the weakness we have seen the last few quarters for Oracle," FBR Capital Market analyst Daniel Ives told the San Jose Mercury News.

"While the company still has some wood to chop to get back to better growth prospects, we believe investors will walk away from these results feeling better about Oracle's growth potential going forward. This is also a good barometer for the rest of IT spending and speaks to a modestly better spending environment heading into year-end."

On the investor/analyst conference call, Catz said that the company was particularly pleased with its software sales, which amounted to $6.1 billion, or about 75 percent of total sales, in the quarter—translating to 8 percent growth year over year.

The company reported new software license income at $1.7 billion, up 6 percent of the year-ago quarter. The slow pace of selling new licenses had been a target of criticism by analysts last quarter.

Overall hardware sales were down sharply at $669 million, which is a legitimate cause for concern among investors and analysts alike. Oracle invested $7.4 billion to buy Sun Microsystems in 2010 and has yet to see a substantial profit as a result of that deal.

Oracle reported $39 billion in cash and securities and said its quarterly cash flow of $6.1 billion was nearing that of a major market rival. "We're now on the cusp of generating more free cash flow than IBM," Catz said.

Oracle, as do many West Coast-based IT companies, announced its earnings at 2 p.m. Pacific time after the stock market close, when the company's shares rose 61 cents, or nearly 2 percent, to $33.87. However, in after-hours trading, its shares retreated by about 3 percent.