3rd UPDATE: Oracle 4Q Net Down 7% On Stronger Dollar,Econ Weakness
June 23 2009 - 7:54PM
Dow Jones News
Oracle Corp.'s (ORCL) fiscal fourth-quarter profit declined
7.2%, its first revenue decline in seven years, as the stronger
dollar and continuing economic weakness weighed on revenues and
earnings.
But stronger-than-expected new license sales and continuing cost
management helped the company beat Wall Street expectations, giving
some comfort that the company is weathering the storm. On a
conference call with investors Tuesday, Oracle executives presented
a more upbeat picture of the economy, saying their business
pipeline is improving.
Shares were up 2.7% at $20.40 in recent after-hours trading,
reflecting broad comfort that the company is managing well through
the downturn. Oracle's stock has been rebounding since hitting a
three-year low in March.
The Redwood City, Calif.-based database and business software
giant has been hurt by current impacts over the past three
quarters, and a decline in revenue in the latest quarter highlights
how tech companies are still facing a difficult economic
climate.
Oracle, which has spent roughly $30 billion on acquisitions in
the past four years to boost its portfolio of products, made a
surprise bid for Sun Microsystems Corp. (JAVA) in April, which
brings it into the technology hardware sector for the first time in
a significant way. Oracle has a strong track record with
acquisitions, which have added to both top-line and earnings
growth.
For the quarter ended May 31, Oracle reported earnings of $1.89
billion, or 38 cents a share, down from $2.04 billion, or 39 cents
a share, a year earlier. The stronger dollar reduced earnings by 5
cents a share in the latest quarter.
Excluding stock-based compensation, restructuring and
acquisition-related costs, earnings fell to 46 cents a share from
47 cents. Assuming fixed exchange rates, the latest figure would
have been 51 cents.
Revenue fell 5% to $6.86 billion, but would have risen 4% if
currency rates were constant. Software revenue dropped 3% and
services revenue slid 16%. At fixed exchange rates, software
revenue rose 6%, while services revenue fell 7%.
Analysts were expecting earnings, excluding stock-based
compensation, restructuring and acquisition costs, of 44 cents, on
revenues of $6.47 billion, according to a Thomson Reuters
survey.
In March, the company said it expected earnings of 42 cents to
46 cents a share on a 10%-to-14% drop in revenue, assuming the
currency exchange rates at the time of the projection.
Operating margins, meanwhile, rose to 42% from 40.8%.
New license revenue, a key measure of software growth, dropped
13% to $2.7 billion, and fell 4% assuming exchange rates held
steady. In March, Oracle had predicted a 5%-to-15% decline at
constant currency rates.
Analysts were expecting new software license revenues of around
$2.5 billion, according to a survey by Thomson Reuters.
On an investor call, Oracle said it expected total revenues for
the first quarter, on a GAAP basis, to grow by between 1% and 4% on
a constant currency basis, or to shrink by between 4% and 1%
assuming current exchange rates. On a non-GAAP basis, the company
expects revenues to be between flat and 2% on a constant currency
basis, or to shrink by between 5% and 3% at current rates.
Earnings per share, on a GAAP basis, are expected to be between
23 cents and 24 cents on a constant currency basis, or between 21
cents and 22 cents at current rates.
- By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com
- By Jessica Hodgson, Dow Jones Newswires; 415-439-6455;
jessica.hodgson@dowjones.com