Oracle Forecasts Profit Above Analysts’ Predictions (Update2)
By Aaron Ricadela
Dec. 16 (Bloomberg) -- Oracle Corp., the second-largest software maker, forecast profit for the current quarter higher than analysts predicted, adding to evidence that it’s benefiting from an acquisition-fueled expansion into computer hardware.
Profit excluding certain expenses will be 48 cents to 50 cents a share, Oracle said today on a conference call. That compares with 47 cents, the average estimate of analysts surveyed by Bloomberg. That followed a report showing profit on that basis of 51 cents in the period ended Nov. 30, exceeding the 46-cent average of analysts’ predictions.
Chief Executive Officer Larry Ellison is bulking up in hardware to supplement his software businesses, and making headway on a projection that Sun Microsystems Inc., bought this year, will add $1.5 billion to fiscal 2011 operating profit. That’s helping quell concerns that Oracle wouldn’t be able to integrate its more than $40 billion in acquisitions since early 2005, said Jason Maynard, an analyst at Wells Fargo Securities.
“Years ago, people didn’t believe in the strategy,” said Maynard, who is based in Santa Monica, California, and rates Oracle “outperform.” “There were a lot of doubters on the Street. People have flipped.”
Oracle, based in Redwood City, California, rose 3.9 percent to $31.45 in extended trading. It had fallen 22 cents to $30.27 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have gained 23 percent this year.
The company reports sales that include deferred revenue from acquired companies and don’t conform to generally accepted accounting principles. On that basis, sales increased to $8.65 billion in the second quarter.
New License Sales
New software license sales, a predictor of revenue, gained 21 percent to $2 billion last quarter. Maynard predicted $1.85 billion. In the coming months, Oracle will release new versions of its business applications developed under a project known as Fusion.
Israel Hernandez, an analyst at Barclays Capital, said in a note to clients that “Oracle remains exceptionally well positioned to benefit from a cyclical upturn in enterprise software spending.” Hernandez rates Oracle “overweight.”
Oracle also said it will issue a dividend of 5 cents a share. The dividend will be payable on Feb. 9 to holders of shares as of Jan. 19.
Under Ellison, Oracle has spent more than $42 billion to acquire more than 65 companies since the beginning of 2005. The stock has more than doubled in the past five years, compared with an 18 percent gain for the S&P technology index.
Ellison’s acquisition spree has stiffened competition with SAP AG, Hewlett-Packard Co., and International Business Machines Corp. HP, the world’s largest computer maker, forecast first- quarter profit last month that exceeded analysts’ estimates.
On Nov. 24, Oracle won a $1.3 billion jury award in a federal copyright infringement case against SAP.
Net income in the second quarter rose 28 percent to $1.87 billion, or 37 cents a share, from $1.46 billion, or 29 cents, a year earlier, Oracle said.
To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
Last Updated: December 16, 2010 17:56 EST |
