This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Oracle Shares Dive as Key Growth Area Disappoints

Stocks in this article: ORCL

Updated from 4:57 p.m. ET with conference call and current after-hours trading information.

NEW YORK ( TheStreet) -- Oracle (ORCL) shares were retreating in after-hours trading even after the software giant reported earnings that met fiscal fourth-quarter earnings expectations, a dividend hike, and an extension to its share buyback program.

Shares were plunging more than 8% to $30.50 in extended hours trading as investors became fixated on the company's disappointing and flat revenue growth, as its cloud ambitions were met with sluggish-looking results. Cloud is supposed have been a key area of future growth for Oracle as the company tries to manage a transition to a cloud architecture from its traditional client-server architecture.

Although company president Mark Hurd reported that Oracle added more than 500 new Software as a Service customers in the fourth quarter, both GAAP and non-GAAP new software licenses and cloud software subscriptions revenues rose a mere 1% to $4 billion. Even without the impact of a stronger U.S. dollar during the quarter, overall new software licenses and cloud software subscription revenues would have been up just 2%.

The company is predicting adjusted earnings ranging between 56 and 59 cents a share versus the consensus estimate of 58 cents a share, according to Thomson Reuters. Total revenue growth is expected to range from 3% to 6%. At current rates, currencies are expected to hurt overall growth rates by about 1%. Growth for new software license and cloud subscription revenue is expected to range from flat to 8%, while hardware product revenue growth is expected to range from minus 6% to 2%.

Oracle reported fiscal fourth-quarter earnings of 87 cents a share, up 5% from a year ago. Revenue was unchanged at $11 billion. Analysts on average were expecting sales of $11.12 billion, according to Thomson Reuters.

Oracle also announced Thursday that it plans to repurchase up to an additional $12 billion of common stock under its existing share repurchase program in future quarters. Also, Oracle said it has applied to list on the New York Stock Exchange under its current symbol "ORCL" on July 15, switching its listing from NASDAQ.

On a brighter note, revenue from software license updates and product support were stronger than expected, rising 8% to $4.4 billion vs. the average Wall Street estimate of about $4.22 billion. The category made up 40% of the company's total revenues during the quarter.

Hardware systems products revenue came in at $849 million, which was also better than expected especially considering the disappointments from this business in previous quarters. Analysts had forecast revenues of $789 million for this category. It brought in 8% of total revenues.

Operating margins were in line at about 51%, compared with the street estimate of 51.5%.

Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs