Oracle Earnings Mixed, Market Focused Elsewhere - Analyst Blog

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We're not really expecting much of a breakout in the after-market following Oracle's ( ORCL ) Q1 (fiscal 2014) earnings report, which was just released after the bell today. The legacy hardware and software provider posted quarterly earnings of 56 cents per share (non-GAAP, excluding amortization and restructuring) on revenues of $8.38 billion. This was a 3-cent beat on the bottom line, but fell short of the Zacks Consensus $8464 million on the top line.

But with the Fed surprising most everyone in the markets today by not beginning to taper quantitative easing (QE), there's little impact Oracle's earnings are likely to have. First, mixed reports usually cause a stock to stay somewhat range-bound near-term, and secondly, Oracle's days as a tech behemoth are a bit in the rearview these days, as cloud computing has taken large bites out of the "old-style" legacy tech firms over the past few years.

Besides, it doesn't look like Oracle's CEO Larry Ellison's really sweating Q1 earnings too much this afternoon; he's right now getting ready to defend his yacht club's America's Cup win from last year. To quote Mel Brooks: "It's good to be da king!"

Anyway, as per normal, analysts covering Oracle have been holding estimates steady over the past quarter. So steady, in fact, that zero estimate revisions have been made by any of the ten analysts following Oracle in the past three months. This quarter's 5.66% positive surprise may not look so huge, but it's the biggest surprise either way in the past 5 quarters. In short, Oracle doesn't seem to present many conundrums (conundra?) for analysts these days.

For the company itself, however, it might be a slightly different story. Hardware revenues have been tough sledding, and they missed expectations in Q1. New software licenses were up 4%, and operating margins were a better-than-expected 45%, but ultimately it's going to come down to migrating from legacy systems to cloud computing (Software-as-a-Service, etc.), and how deftly they can fully implement their new business model relative to its competition.

Obviously, the change won't happen overnight. Heck, even the America's Cup races take longer than a week.



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

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