Dear Sonki, Oracle had blow-out earnings. 26 cents vs First Call's 22 cents Do you think it will help the Nas tomorrow?
Best wishes,
Mephisto
Oracle whizzes past profit target
By Mike Tarsala, CBS MarketWatch
Last Update: 7:29 PM ET Dec 14, 1999
REDWOOD CITY, Calif. (CBS.MW) -- Oracle Corp. on Tuesday
reported per-share earnings of 26 cents on total revenue of $2.3 billion --
breezing past analysts' profit expectations.
In after-hours trading, shares of Oracle jumped as high as 84 vs. a closing
price of 76 15 1/16 in the regular session.
In per-share terms, the fiscal first-quarter profit was 19 cents better than
the database-software titan reported in the year-ago period, and it
whizzed past the consensus estimate of 22 cents.
Overall earnings for the period rose 40 percent to $384 million from $274
million. Revenue jumped 10 percent from $2.1 billion in the year-ago
period.
Silencing critics?
Despite a share-price gain of 98 percent for the quarter and a parade of
new business, Oracle (ORCL: news, msgs) had been under pressure from
skeptics before reporting its latest results.
The company reported 18 percent software license
revenue growth -- a number that should satisfy the
company's critics. Wall Street has been scrutinizing
Oracle's software license revenue growth rate --
the sore spot that sent the stock reeling 14 percent
following its previous quarterly report.
In the quarter ending Aug. 31, Redwood City,
Calif.-based Oracle reported net income grew to
$237 million, or 16 cents a share, compared with
$195 million, or 13 cents, in the year-earlier
quarter.
But revenue growth in the first quarter to $2 billion
from $1.7 billion in the August 1998 period
provoked dismay among analysts. Specifically,
some observers didn't like the company's software
revenue boost -- considered paltry at 9 percent.
Analysts had expected Oracle to improve
sequentially, beating last quarter's software sales.
But Oracle did even better than anticipated.
"If they hit license revenue growth in the range of
12 percent to 15 percent, it would be very good and represent strong
growth," said Stephen Palfrey, an analyst with Bernstein in New York,
speaking before the latest earnings report.
In the company's conference call
following its last quarterly report,
Larry Ellison, Oracle's chief
executive, vowed to jump-start
licensed software sales in the
second quarter. Ellison said
sales of Oracle's database
software to leading Internet sites
is "through the roof," although he
didn't provide specifics.
Ellison's bravado
"One quarter does not make a trend," he said in the conference call.
"Place your bets, gentlemen. We're going to have a strong year."
To be sure, Ellison has given analysts reason to believe the bravado he
doled out three months ago. Oracle has been in a push to find new
business, to add to its market-leading database software. And Ellison
came through, delivering a potentially lucrative deal in forming a
business-to-business e-commerce joint venture with Ford (F: news, msgs)
last month.
The Ford deal hardly will add a trickle to this quarter's revenue, said Alex
Kotlyar, an analyst with C.E. Unterberg, Towbin in New York.
New business gained this quarter isn't likely to add to revenue until at least
mid-2000, he said. But the company has capitalized from it already, he
said -- especially in marketing and public relations. The well-publicized
Ford deal is helping Oracle become known among the ".com" companies
and eventually will add to both its top and bottom lines.
"It gives them the perception of participating in the procurement market,
and it gives them more sales leads," Kotlyar said. "They're now
recognized as a major player." The company also introduced several
products during the quarter, including the anticipated Oracle Integration
Server.
That software offering can take many types of old data and make them
accessible to newer types of Internet-based applications used by large
corporations. It's designed to connect data from companies and their
suppliers -- irrespective of storage format. The new software is likely to
contribute to revenue in future quarters, analysts say. Talking points
Oracle is expected to update analysts about its applications business --
especially sales of its customer-relationship management software. Oracle
entered the market for so-called CRM software in May.
Executives said they entered the fast-growing software business to keep
ERP -- or enterprise resource planning -- software makers from flooding
it. And an update about Oracle's Asia business is in order. It could be
especially strong this quarter, propelled by recent sales success, as well as
strong currency exchange rates.
Analysts also are expecting to hear more on Oracle's expense controls,
which are more likely to directly affect the to-be-announced numbers. In
an ongoing cost-cutting campaign, the company has made strides in
holding down expenses this year, analysts say.
Mike Tarsala is a reporter for CBS MarketWatch.
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