Oracle Income Flatlines: Hardware, Services Still Hurting
Oracle, which is seeing some of its business level off—and in some cases erode—in the face of less-expensive cloud-based competition, on June 20 reported a tidy profit to go with flat overall income for the financial quarter that ended May 31.
Its stock price took a fall after the session close, slipping an alarming 8 percent to $30.59, most likely because revenue is not showing signs of growth.
In its Q4 2013 report, Oracle revealed a profit of $3.81 billion (80 cents per share), which was up from $3.45 billion (69 cents a share) a year earlier. Revenue edged up one-third of a percent to $10.95 billion.
Per-share earnings rose to 87 cents from 82 cents a year ago. Oracle had projected adjusted earnings of 85 cents to 91 cents a share and revenue to range from a decline of 1 percent to growth of 4 percent.
Total revenue in Oracle's bread-and-butter software division increased 3.6 percent, but income fell more than 9 percent in its services and hardware groups each—services 9.5 percent, hardware 9.3 percent.
Oracle has been struggling in the hardware business for more than three years since it acquired servers, storage and networking from Sun Microsystems in January 2010. It was Oracle hardware's eighth consecutive quarter of revenue decline.
In good news for stockholders, Oracle doubled its quarterly dividend to a payout of 12 cents a share and authorized repurchase of up to an additional $12 billion of common stock. The company also said that it has applied to transfer its shares to the New York Stock Exchange from the Nasdaq.
Web-based service companies such as Salesforce.com and a number of smaller players have cut substantially into Oracle's traditional CRM and other software businesses. Oracle didn't launch its own subscription-based cloud services division until June 2012, long after many others had already been established as market leaders.
"We don't see revenue growth at all. ... ORCL technology is too ancient in light of what Amazon.com is doing with AWS; Redshift; Pivotal; and VoltDB," analyst Trip Chowdhry of Global Equities Research wrote in a media advisory.