Technology
Why Oracle Is Not Worried About the Strong Dollar
March 17, 2015 4:47 pm
Last Updated: April 28, 2020 10:22 am
The currency fluctuation toward a stronger dollar hurt Oracle in its fiscal third quarter. Operating income was down 4% to $4.2 billion, and the operating margin was 45%. However, without the negative foreign exchange impact, operating income would have been up 4% and operating margin would have been 46%.
Total revenues would have been up 6% if they had been measured in constant currency. In terms of the other segments:
During this quarter, Oracle also announced that its board of directors declared a quarterly cash dividend of $0.15 per share of outstanding common stock, reflecting a 25% increase from the current quarterly dividend of $0.12.
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Larry Ellison, Oracle’s chairman and chief technology officer, remained committed to the goal of blowing out cloud sales in fiscal year 2015:
We are well on our way to selling over $1 billion of new SaaS and PaaS business in calendar 2015. Salesforce.com has announced that it also expects to add about $1 billion of new SaaS and PaaS business this year. So it’s going to be a close race who sells more in the cloud this year, us or them. Stay tuned.
If Oracle can continue to grow the SaaS and PaaS segment and execute the plan that Ellison previously set in motion, the company will be way better off in the long run. The strong dollar will pass as most currency fluctuations do, and at that point Oracle will be better positioned to capitalize after developing this segment.
In the week ahead of earnings, quite a few analysts made calls on Oracle and the direction that it is headed. Sentiment was somewhat mixed:
On Tuesday, shares of Oracle closed down 1.2% at $42.87. The initial response in after-hours trading was positive and shares were up 0.7% at $43.18 following the report. The stock has a consensus analyst price target of $45.46 and a 52-week trading range of $35.82 to $46.71.