Oracle (ORCL) Investors Selling Shares Following Q2 Profit, Sales Miss

December 20, 2011 4:56 PM EST
Shares of Oracle (Nasdaq: ORCL) have slumped nearly 8 percent Tuesday afternoon as investors are showing clear disappointment with the enterprise software company's quarter.

Oracle posted second-quarter GAAP sales of $8.79 billion, up 2 percent from the $8.58 billion reported during the same quarter last year. Adjusted sales came in at $8.81 billion. Revs fell short of Street expectations calling for sales of $9.23 billion.

New software license sales of $2.048 billion made up about 23 percent of the company's total sales while revenue from software license updates and product support of $3.986 billion made up about 43 percent of sales. Notably, sales to the software side of Oracle's business (which is comprised of the above two units) surged 69 percent from $5.64 billion in the year-ago quarter to $6.03 billion. Sales from hardware systems were $1.57 billion, about 20 percent of total sales. Revenue from the services segment reached $1.18 billion.

The company's GAAP net income totaled $2.19 billion, up 17 percent from 2010's second quarter, while non-GAAP net income rose nearly 6 percent to $2.784 billion. On a per-share basis, pro-forma earnings were also up about 6 percent from 51 cents last year to 54 cents. Analysts on the Street had been anticipating quarterly EPS of 57 cents.

GAAP operating margin rose from 32 percent in the year-ago quarter to 35 percent. Adjusted operating margin was up from 44 percent to 45 percent.

Oracle President Mark Hurd said, "We have expanded our worldwide sales capacity by adding over 1,700 sales professionals in the first half of this fiscal year. We believe that this increase in our field organization combined with innovative new products like Fusion Cloud ERP and Cloud CRM will enable solid organic growth in the second half of this year."

Larry Ellison, the company's CEO said, "Sales of our engineered systems accelerated in Q2. Exadata growth was well over 100% compared to last year, and Exalogic grew more than 100% on a sequential basis. We shipped our first SPARC SuperCluster in Q2 and expect to begin deliveries of our Exalytics system and the Oracle Big Data Appliance in Q3."

Also with the earnings report, Oracle announced its Board authorized the repurchase of up to $5 billion in additional common stock.

UPDATE: On its conference call, Oracle said it sees third-quarter sales up 1-5 percent in US dollars, or 3-7 percent in constant currency, sees adj-EPS of 55-58 cents in US dollars, 56-59 cents constant currency.

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Mark Hurd, Larry Ellison, Earnings