2.69: In a call to analysts Thursday, Oracle issued third and fourth quarter earnings projections, which were roughly in-line with expectations. It also laid out plans to layoff 2,000 workers, as part of its $5.85 bln acquisition of rival software producer, Siebel Systems, hoping to save $400 mln. Excluding items, Oracle sees Q3 earnings of 18 cents per share, a penny lower than its prior guidance and consensus of 19 cents. Revenue guidance indicates a year/year growth rate of 14% using the midpoint of the $3.45-$3.49 bln range, compared to the $3.45 bln consensus estimate. For the fourth quarter, it sees non-GAAP EPS of 26-28 cents per share versus a consensus estimate of 27 cents. The slight downward revision is weighing on shares in Europe.
The software giant also indicated its aggressive acquisition strategy may not be over in its quest to fill out its product portfolio. This fact, along with expectations Oracle will resume its share buyback program will likely continue to generate interest in shares. Oracle has been on a buying spree aimed at strengthening its software applications business, which is one of the strongest growth areas in the industry. Oracle anticipates its latest will contribute $10 mln, or less, in the current quarter, with any upside coming from Oracle's core database and middleware business.
Oracle seemed generally surprised by what it found at Siebel, in terms of its backlog and the strength of the business intelligence unit. The company will break out Siebel in the quarters ahead in terms of sales and guidance. On the conference call, management indicated that it sees opportunities to increase Siebel's maintenance rates and that its preference is to have recurring revenues versus inflated license numbers. All new Siebel licenses will be priced at the current Oracle rate. ORCL trades 23.0x trailing earnings. |
