Oracle Sales, Profit Miss Estimates: Ellison Exits as CEOJack Clark
Oracle Corp.’s profit and sales missed analysts’ estimates in its fiscal first quarter as the company struggled to keep pace with an industrywide shift to cloud computing. Chief Executive Officer Larry Ellison is stepping down after leading the company for more than 35 years.
Revenue for the period ended Aug. 31 climbed 2.7 percent to $8.6 billion and profit before certain costs was 62 cents a share, the company said in a statement today. On average, analysts projected profit of 64 cents on revenue of $8.78 billion, according to data compiled by Bloomberg. It’s the third year of quarterly sales growth of less than 5 percent.
Mark Hurd and Safra Catz, currently co-presidents, were both named CEOs, as the company aims to turn itself into a provider of the software and gear that corporate customers need to shift to Web-based computing. Ellison spent more than $50 billion to acquire about 100 companies in the past decade, seeking to bolster Oracle’s database, hardware and business-applications businesses, including the purchase of Micros Systems Inc. for $5.09 billion this month.
“They’re having to adapt to a new business model,” said Brent Thill, an analyst at UBS AG, who has a buy rating on the stock. “All the big legacy vendors are under major duress.”
The shares of Redwood City, California-based Oracle fell as much as 5.2 percent in extended trading. The stock advanced 1 percent to $41.55 at the close in New York, leaving it up 8.6 percent this year.
Oracle’s board also announced the buyback of $13 billion shares under the company’s share repurchase program.
Net income in the first quarter fell to $2.18 billion, or 48 cents a share, from $2.19 billion, or 47 cents, a year earlier.
New software license and cloud subscriptions sales rose 4.7 percent to $1.85 billion, as the company brings in new customers amid increased competition from startups such as MongoDB Inc. or DataStax Inc., and established rivals such as Salesforce.com Inc. and SAP SE.
Oracle has started to sell database software called 12c in-memory that can take advantage of large amounts of computer memory to increase performance. The technology “gives the company the chance to upsell to existing clients,” said Bill Kreher, an analyst at Edward Jones & Co.
“This is, effectively, the next step in the evolution towards a cloud company,” said Kreher, who has a buy rating on the stock.