NEW YORK (TheStreet) -- Oracle (ORCL) posted a larger-than-expected sales decline and missed analysts' profit forecasts for its fiscal quarter ended May 31. The business software maker blamed the shortfall on the strong U.S. dollar, which has appreciated against major world currencies, effectively discounting each sale the company made abroad. Oracle said its total revenue fell 5% from a year ago, or rose 3% after adjusting for the stronger dollar.
Total software revenue fell 6% to $8.4 billion in its fourth quarter, when its sales typically are strongest. Investors and analysts fixated on Oracle's weak sales of new software licenses. In one of the few bright spots in the quarter, revenue rose 28% from some of the company's cloud services, or software retooled for delivery over the Web and sold as a subscription.
Still, those services accounted for just 5% of total revenue last quarter. Overall, net income fell 24% from a year earlier to $2.76 billion, or 62 cents a share, on $10.71 billion in overall revenue. In year-ago period, net was $3.65 billion, or 80 cents a share. Excluding stock compensation and some other costs, Oracle's adjusted earnings were 78 cents a share, short of analysts' estimate of 87 cents a share, significant since Oracle's fourth quarter is typically its strongest as salespeople close deals to make their annual quotas.
Analysts expected Oracle's revenue to be feeling the foreign-exchange rate, which has been hurting many large international U.S. companies of late. The board declared a quarterly cash dividend of 15 cents per share. Like many old-guard tech companies, Oracle is trying to reinvent its products and sales approach to adapt to the changing ways businesses use and buy technology. Its financial struggles spotlight how tough it has been for Oracle-hugely successful in a prior era of technology-to remain relevant and maintain growth. Through Wednesday's close, its share price this year has been roughly flat, underperforming major market indexes.
TheStreet Ratings team rates ORACLE CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate ORACLE CORP (ORCL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow."
You can view the full analysis from the report here: ORCL Ratings Report