Seattle: Oracle's fourth-quarter profit and sales missed analysts' estimates, as the company seeks to remake itself into a cloud-computing provider and catch up to Salesforce.com and other rivals.
Profit before certain costs was 92 cents a share in the period that ended May 31 on revenue of $11.3 billion, the company said in a statement.
On average, analysts projected profit of 96 cents and $11.5 billion in sales, according to data. The shares slipped in extended trade and Oracle gave forecasts for the current quarter that were in line with estimates.
The database and business-software maker, which has relied on acquisitions to fuel growth, has seen the benefits of those deals peter out, posting sales growth of less than 5 per cent for the past 11 quarters. Chief executive officer Larry Ellison is nearing a deal to buy Micros Systems for more than $5 billion, according to people familiar with the matter, and he's also seeking to jump-start growth by remaking Oracle into a cloud provider to win back corporate customers adopting programs delivered via the Internet.
"This is a shocker for investors who were expecting a slight beat in the quarter — new licence sales were weak and it's quite clear the company has a lot of heavy lifting in front of it," said Daniel Ives, an analyst at FBR Capital Markets, who rates Oracle the equivalent of a buy.
"Part of it is execution, part of it is product related."
The shares of Redwood City, California-based Oracle fell 5.4 per cent to $40.25 in extended trading. The stock declined less than 1 per cent to $42.51 at Thursday's close in New York, leaving it up 11 per cent this year.
Net income in the fourth quarter fell 4.2 per cent to $3.65 billion, or 80 cents a share. New software-license sales, a closely watched indicator of future revenue, was unchanged at $3.77 billion, the company said. Hardware systems sales rose 2.4 per cent to $1.47 billion during the quarter.
For the current quarter, which ends in August, Oracle chief financial officer Safra Catz said profit, excluding some costs, will be 62 cents to 66 cents a share, and sales will climb 4 per cent to 6 per cent. Analysts on average were predicting profit of 64 cents and a revenue gain of 5 per cent to $8.78 billion.
Catz attributed lower revenue to the transition to cloud software, products for which the company recognizes revenue over the term of a subscription. With traditional software, Oracle recognizes revenue up front when it makes a sale.
Oracle and Micros, a provider of software for hotels and restaurants, are in exclusive talks, though the two sides could still fail to reach an agreement.
The company has worked to catch up in cloud computing and to rebuild a sales force. weakened by defections to rivals, said FBR's Ives.
"It's still a challenging information-technology spending environment, but if Oracle isn't doing well it comes down to execution issues and a product strategy that isn't yet seeing the near-term deal flow that investors would want," Ives said.