New Software Licenses Will Shoot Oracle Higher In 2013

Oracle (ORCL) reported its first quarter earnings after the closing bell Thursday. The company reported that fiscal first quarter earnings per share of $0.53, higher than the previous year’s $0.48. Revenues came in at $8.21 billion, a decline of 2% compared to the same period last year.

According to the consensus estimates of Thomson Reuters, analysts expect $0.53 earnings per share on $8.42 billion. From these figures, Oracle’s earnings came in line with expectations, but its revenues have fallen short of estimates. This is a big reversal from the previous quarter’s earnings results. Excluding one-off items, Oracle reported $0.73 per share, up by 8.2% year-on-year. This was at the upper range of the company’s guidance of $0.78 to $0.83 per share.

The weaker quarterly report seems understandable. First quarter has been usually seasonally weak for Oracle. I expect this trend to continue in the next fiscal second quarter, but believe that third and fourth quarter will most likely offset the weaknesses in the previous quarter. The slower than expected financial results is due to the significant drop on hardware sales. Moving forward, it expects that hardware sales to decline further as it strives to turn around its Sun computer division amid lower technology budgets from enterprises. Meanwhile, its acquisitions of RightNow Technologies and Taleo Corp delivered strong applications sales for the company but were not enough to offset the declining hardware sales.

These were big ticket acquisitions recently and aimed to increase the company’s offerings in the cloud computing space. To continue reading, click here.