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Oracle Plunges: What Wall Street's Saying

Stocks in this article: ORCL

Updated from 9:14 a.m. to include thoughts from Sterne Agee analyst.

NEW YORK (TheStreet) -- Oracle (ORCL) shares plunged in premarket trading on Friday as the company missed Wall Street estimates for both earnings and revenue, despite becoming "the Second Largest Cloud SaaS Company in the World," according to the company's press release.

Fiscal fourth-quarter earnings came in at 92 cents a share, as the company generated $11.31 billion in revenue, up just 3.4% year over year. The company noted that revenue for software and cloud, its biggest segment, came in at $8.9 billion, up 4% year over year, aided by software-as-a-service (SaaS) and platform-as-a-service (PaaS) revenue, which rose 25% to $322 million. Its two biggest components of this segment, new software licenses and software license updates and product support revenue, came in at $3.8 billion and $4.7 billion, respectively.

Analysts surveyed by Thomson Reuters were expecting the Redwood City, Calif.-based Oracle to earn 95 cents a share on $11.48 billion in sales.

Shares were falling 5.6% to $40.12 in early Friday trading.

As the world moves toward cloud computing, CEO Larry Ellison noted Oracle is now the second-largest cloud company in the world, presumably only behind Salesforce.com (CRM), which was mentioned in the press release.

"In SaaS, we're in front of everybody but salesforce.com," Ellison said in the release. "In IaaS we're larger and more profitable than Rackspace. We have by far the most complete portfolio of modern SaaS and PaaS products in the industry: CRM: Sales, Service & Marketing; HCM: HR, Payroll & Talent; ERP: Accounting, Procurement, Supply Chain & more. All these SaaS products run on the world's most powerful PaaS: the Oracle in-memory multitenant database and Java. We plan to increase our focus on the Cloud and become number one in both the SaaS and the PaaS businesses."

The company also announced Friday morning it has signed an agreement to acquire LiveLOOK, which provides real-time, "visual collaboration technology for co-browsing and screen sharing."

Though Oracle is focusing on becoming a cloud computing company, it still has legacy hardware from its Sun Microsystems acquisitions, something the company noted is now profitable and growing.

"We have transformed Sun's commodity hardware business into a profitable and growing Engineered Systems business," said Oracle President Mark Hurd in the press release. Overall hardware systems revenue rose 2% year over year to $1.5 billion; hardware systems products revenue was $870 million, while hardware systems support revenue was $596 million.

For the first quarter of fiscal 2015, Oracle said it expects revenue will rise between 4% and 6%, and expects to earn between 62 cents and 66 cents a share. Analysts surveyed by Thomson Reuters forecast the company to earn 64 cents a share.

Despite the miss, analysts by and large seemed to be positive on the company's prospects, noting 2015 is expected to be an even better year, as the company becomes the largest software-as-a-service company in the world. Here's what a few of them had to say.

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