REDWOOD SHORES (dpa-AFX) - Oracle Corp (ORCL) Thursday reported a four percent decline in fourth-quarter profit, due mainly to some flat growth in software licensing revenue and increased operating expenses, while hardware business registered modest growth. Both earnings and revenue fell short of Wall Street estimates, dragging Oracle shares down more than 6 percent in after-hours trade on the New York Stock Exchange.
The results come as Oracle adopts an acquisition-led growth strategy and is pinning hopes on cloud-based software. But investors question Oracle's shift from the traditional business of licensing software to cloud computing, given that its revenue has slowed down over the past quarters.
Oracle, which is now the second largest SaaS company in the world, faces stiff competition from Salesforce.com and other cloud-computing companies. But CEO Larry Ellison put such concerns to rest, stating that as its business has transitioned, more software revenues are being recognized over the life of a subscription rather than upfront.
For the fourth quarter, Redwood City, California-based Oracle posted quarterly net earnings of $3.65 billion, compared with $3.81 billion last year. On a per share basis, earnings were unchanged at $0.80, due to a lower share count.
Excluding items, adjusted earnings for the quarter were $4.2 billion or $0.92 per share, compared with $4.1 billion or $0.87 per share in the prior year.
On average, 34 analysts polled by Thomson Reuters expected Oracle to earn $0.95 per share for the quarter. Analysts' estimates typically exclude special items.
Earnings were hurt by $0.2 per share due to exchange rate changes in Venezuela.
Revenues for the fourth quarter climbed 3 percent to $11.32 billion from $10.95 billion a year ago. Thirty-three analysts had a consensus revenue estimate of $11.48 billion for the quarter.
Software license revenue for the quarter was flat at $3.7 billion, while software license updates and product support revenue grew 7 percent to $4.7 billion. Its smaller business of cloud software-as-a-service and platform-as-a-service was up 25 percent at $322 million.
Meanwhile, hardware systems revenue for the quarter rose 2 percent to about $1.47 billion, but services revenue fell 4 percent to $940 million.
The company's operating expenses for the quarter increased 8 percent to $6.4 billion, along with non-operating expense of $81 million.
On Tuesday, Bloomberg reported that Oracle is nearing a deal to acquire Micros Systems Inc (MCRS) for over $5 billion. Columbia, Maryland-based Micros sells software for food and beverage, hotel, and retail industries.
Oracle declared a quarterly cash dividend of $0.12 per share.
Oracle stock closed Thursday at $42.51, down $0.30 or 0.70%, on a volume of 25 million shares on the NYSE. In after hours, the stock further dropped $2.76 or 6.49% at $39.75. In the past year, the stock has trended in the range of $29.86 - 43.19.
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