Oracle Stock Hammered After Reporting Flat Software Sales

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Oracle Corp. (NYSE: ORCL) reported fourth quarter and fiscal year 2014 results after markets closed Thursday. The software and server company reported quarterly adjusted earnings per share (EPS) of $0.92 on revenue of $11.3 billion. In the same period a year ago, the company reported adjusted EPS of $0.87 on revenue of $10.95 billion. Fourth-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.95 and $11.48 billion in revenue.

For the full year adjusted EPS came in at $2.87 on revenues of $38.3 billion compared with fiscal 2013 EPS of $2.68 on revenues of $37.18 billion. The consensus estimates called for EPS of $2.91 on revenues of $38.45 billion.

Adjusted EPS for the fourth quarter would have been $0.94 except for a currency exchange loss in Venezuela.

New software licenses contributed $3.8 billion to fourth quarter revenues, flat with a year ago. Cloud software-as-a-service and platform-as-a-service subscription revenues rose 25% to $450 million year-over-year, while cloud infrastructure-as-a-service revenues rose 13%. Hardware sales and support revenues 2% each to a total of $1.5 billion. Services revenues fell 4%, to $940 million.

On a non-GAAP basis, operating income was up 4% to $3.7 billion and flat at $2.9 billion on a GAAP basis. Without the impact of currency exchanges, adjusted EPS would have been 14% higher and total revenues would have been 4% higher.

Oracle did not provide any guidance in its earnings announcement, but is likely to do so on its conference call later today. The consensus first quarter 2015 estimates from Thomson Reuters call for adjusted EPS of $0.64 on revenues of $8.78 billion. The full year 2015 estimates call for EPS of $3.19 and revenues of $40.31 billion.

Safra Catz, Oracle President and CFO, said that the company’s cloud subscription business s nearing a run rate of $2 billion a year and CEO Larry Ellison noted that the company is now the world’s second-largest software-as-a-service company trailing only (NYSE: CRM). Ellison also said, “We plan to increase our focus on the Cloud and become number one in both the SaaS and PaaS businesses.”

Oracle does not provide any guidance until the company’s conference call. The company’s stock trades at around 13.5-times 2015 expected earnings, but the stock is near all-time highs.

The EPA results came in sharply below the whisper number of $0.98 and that is hammering the shares in the after-hours session.

Shares are trading down nearly 6% in the after-hours market on Thursday at $40.04 in a 52-week range of $29.86 to $43.19. The consensus analysts’ price target on the stock was $$43.60 before today’s announcement.

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