Oracle Share Price: Stock Plummets as Sales Disappoint

June 21, 2013

Oracle Corporation (NASDAQ:ORCL), the world’s largest maker of database software, has missed sales estimates for a second straight quarter as customers shifted to Web-based business tools offered by rivals such as Salesforce.com (NYSE:CRM).

The disappointing results sent the Oracle share price about 9 percent lower to $30.30 in extended trading in New York yesterday, June 20.
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**Financial results**
Oracle’s fiscal fourth quarter results released on yesterday raised concerns among investors that Chief Executive Officer Larry Ellison might find it difficult to get the company back on track. Revenue for the three-month period ended May 31 was $10.9 billion, unchanged from a year earlier. That figure trailed the $11.122 billion average that analysts had expected, Reuters said. Revenue from new software sales and Internet-based software subscriptions increased one percent to $4 billion, lower than an average forecast of about $4.2 billion, according to FBR Capital analyst Daniel Ives.

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The company’s net profit for the period was $3.8 billion, or 80 cents a share, up 10 percent from the previous year. On an adjusted basis, Oracle’s earnings per share were 87 cents.
Impacted by the disappointing sales, the Oracle share price fell about nine percent in after-hours trading, a decline which Kim Forrest, a senior analyst at Fort Pitt Capital Group, described as “really bad”.

“I don’t really trust after-hour trading to accurately reflect what the stock will do the next day. But it shows you how frustrated shareholders are right now,” he said as quoted by Reuters.
According to StarMine Professional, most analysts have recommended buying shares of Oracle, with many expecting that performance will pick up as global economy improves and corporate customers become more willing to spend on IT.

**Changing landscape**
CEO Ellison attributed the disappointing performance on the poor global economic climate, saying that “it was clearly an economic issue, not a product, competitive issue”. But the company is also experiencing intensifying competition from smaller rivals providing business services over the cloud or Internet and competitive pricing that often undercut Oracle. The US giant has been slow to jump to the new trends and, according to analysts, is now forced to play a catch-up.

“The world is moving to software as a service and at some point all these big vendors need to get on board. But the bigger you are the harder it is,” said Pat Walravens, an analyst at JMP Securities LLC, as quoted by Bloomberg.
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“They were caught flat-footed by the interest in the software-as-a-service model,” observed Josh Olson, analyst at Edward Jones & Co.
Oracle has taken steps to improve its position in that area by acquiring providers of cloud-based business solutions such as Taleo Corp., RightNow Technologies Inc. and Eloqua Inc.
**The Oracle share price (after-hours) was $30.30 as of 9.58 GMT, 21.06.2013**
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