Will Oracle Earnings Keep the Tech Rally Alive?

Oracle logo
Source: courtesy of Oracle
Oracle Corp. (NYSE: ORCL) reported its second-quarter earnings Wednesday after the market close. This was the first earnings report the company has had in the wake of Larry Ellison stepping down as CEO. However, Ellison is still with Oracle’s executive chairman and chief technology officer (CTO).

The software giant reported $0.69 in earnings per share and $9.60 billion in revenue, against Thomson Reuters consensus estimates of $0.68 in earnings per share and $9.52 billion in revenue. The second quarter from the previous year had $0.69 in earnings per share and $9.28 billion in revenue.

Oracle reported its revenues by segment as:

  • Software and Cloud, $7.33 billion
  • Hardware Systems, $1.33 billion
  • Services, $935 million

The board of directors declared a quarterly cash dividend of $0.12 per share of outstanding common stock.

New co-CEO Mark Hurd said:

Total Q2 new cloud bookings grew at a rate of more than 140%. We now have over 600 ERP Fusion Cloud customers — that’s five-times more ERP customers than Workday.

Former CEO and current CTO, Larry Ellison, commented on the future of Oracle’s cloud segment:

By Q4 of this year we expect our new cloud bookings to exceed $250 million. Next fiscal year our new cloud bookings will be well over the billion dollars mark.

A few key analyst firms weighed in on Oracle’s position recently:

  • Morgan Stanley raised shares of Oracle to an Overweight rating from Equal Weight and moved its price target up to $50 from $45, on December 15.
  • Piper Jaffray initiated coverage with a Neutral rating and a price target of $44 on December 12.
  • J.P. Morgan initiated coverage with an Underweight rating and a price target of $38 on December 2.

Shares of Oracle closed Wednesday up over 1% at $41.18. Following the release of the earnings report, the initial response in the after-hours market was positive and shares were up over 3% at $42.53.

The stock has a consensus analyst price target of $43.68 and a 52-week trading range of $33.70 to $43.19. Oracle has a market cap of over $183 billion.

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