Oracle Beats Earnings, Perhaps Not Enough on Hardware Drop (ORCL)

Oracle Corporation (NASDAQ: ORCL) managed to beat earnings, but shares are lower on the report because Wall Street was not impressed.  It reported $0.75 EPS on a 12% gain in sales with $10.78 billion in revenues.  The translation is $3.21 billion in profits for the quarter.  Operating income was up 32% to $4.4 billion and operating margin was 40%. Thomson Reuters had estimates of $0.71 EPS and $10.75 billion in sales.  The company noted:

• GAAP operating income was up 32% to $4.4 billion;
• GAAP operating margin was 40%;
• Non-GAAP operating income was up 19% to $5.2 billion;
• non-GAAP operating margin was 48%;
• GAAP net income was up 36% to $3.2 billion;
• non-GAAP net income was up 27% to $3.9 billion.

As far as the units, this was broken down as $7.7 billion in software, and the standout units were product support of $3.96 billion and a 19% gain in software licenses sales of $3.74 billion.  Hardware system sales were $1.83 billion, down 6%.  Software license updates and product support revenues were up 15%.

The company noted that there are over 1,000 Exadata machines installed globally, and it plans to triple that over the next for quarters.

Oracle also declared a quarterly cash dividend of $0.06 per share, which is the same as last quarter but higher than the $0.05 quarterly payout before.

What happened today is that Oracle’s beat was fine on the bottom-line, but sales was just not much of a beat.  After closing at $32.46, the 52-week trading range is $21.24 to $36.50.

Shares are down 6% at $30.53 in the after-hours session.

We do not yet have guidance and that is usually held until the conference call.  Without guidance, investors should consider this as unfinished business.

JON C. OGG