NEW YORK ( TheStreet) -- Oracle (ORCL - Get Report) announced fiscal third-quarter results Wednesday afternoon that completely missed the mark. Revenue came in at $8.97 billion, below the $9.38 billion that analysts polled by Thomson Reuters expected; per-share earnings of 65 cents were a penny shy.
The market responded quickly. Within minutes after the close, Oracle sank nearly 8%, dipping under $33 from a close Wednesday of $35.76 -- a far cry from its mean one-year target estimate of $38.28 a share.
For new software licenses and cloud-software subscriptions -- its bread and butter -- revenue was down 2% to $2.3 billion. Total software revenue was up 4% to $6.67 billion, and hardware-systems revenue declined 16% to $1.24 billion. Services revenue fell 8% to $1.045 billion.
President Mark Hurd tried to put a positive spin on it. "The Oracle Cloud is the most robust and comprehensive cloud platform availablem with services at the infrastructure (IaaS), platform (PaaS) and application (SaaS) level," he said in a press release. "In Q3, our SaaS revenue alone grew well over 100% as lots of new customers adopted our Sales, Service, Marketing and Human Capital Management applications in the Cloud."New interest in Oracle cloud products doesn't seem to be there, if sales are falling -- or does it? Let's look on the bright side. Led by CEO Larry Ellison, Oracle has a lot going for it. The company is expected to release its new T5 microprocessor and M5 system this month. Oracle says its T5 is the fastest microprocessor in the world and explains that its new M5 system can employ up to 32 microprocessors, meaning it can run an Oracle database 10 times faster than the M9000, which the M5 replaces. Granted, the company faced issues regarding the strength of the U.S. dollar. Had that not been a factor, Oracle's EPS would have been 1 cent higher, meeting analyst expectations. Its revenues overall would have been 1% higher, and its revenue from new software licenses and cloud software subscriptions would have come in 2% higher. There is always the chance that Oracle is just at a slow quarter. After all, despite disappointing revenues, the company has been hiring people like mad -- roughly 4,000 over the past 18 months, many of which were hired in sales. And consider its recent acquisitions of Taleo and RightNow -- that could pay off. Don't forget, over the last year, Oracle has repurchased 350 million shares, or $10.6 billion. I mean, this is a company that is gearing up to compete against big players in the IaaS market, like Amazon (AMZN) and IBM (IBM). Those factors could lead Oracle to success going forward.