Oracle (ORCL) Beats the Street, Shares Rise

Shares of Oracle Corporation (ORCL: Charts, News) closed up +0.56 or +1.73 percent to $32.88 per share on Tuesday after the company reported earnings for its second fiscal quarter had exceeded analyst expectations by $0.03 per share.

The company reported earnings of $3.12 billion or $0.64 per share, versus an analyst consensus of $0.61 per share, versus $2.78 billion, or $0.54 per share the company earned in the same period one year ago. Sales also beat estimates, rising +3.2 percent at $9.09 billion, versus $9.02 billion that was expected and considerably better than the $8.81 billion the company earned in the same quarter a year ago. Oracle stock rose an additional +$0.51 to $33.39 per share in pre-market trading on Wednesday. The better than expected profit reflects growing demand for Oracle's Internet software and prospects for its entry into cloud computing through recent acquisitions. Daily Chart
Redwood City, California based Oracle Corporation is the world's third largest maker of computer software by revenue after Microsoft (MSFT: Charts, News) and (IBM: Charts, News). The company specializes in computer hardware and database management systems and after its 2010 acquisition of Sun Microsystems, in Internet based software. In addition to the better than expected second quarter earnings, Oracle's guidance for third quarter earnings was also upbeat. Oracle's estimate for third quarter earnings is between $0.64 and $0.68 per share versus analyst expectations of $0.66 per share. In a phone conference after the release, Oracle CEO Lawrence J. Ellison stated that, "Our $7.5 billion purchase of Sun has already proven to be the most strategic and profitable acquisition Oracle has ever made. Java, the world's most popular programming language was a key software asset we acquired when we bought Sun. Today, our Java business is booming growing over 34% this past quarter. Sun hardware technology has enabled us to become a leader in the highly profitable engineered systems segment of the hardware business." In addition, Ellison stated that the company's hardware business, which had a year on year decline of -23 percent, would turn the corner in Q3 and expects top line growth for the business in Q4. Oracle also recently acquired Taleo Corp and RightNow Technologies which will provide customers with access to data storage on the cloud instead of on their own servers. Cloud software subscriptions and new software licenses revenue increased +17 percent to $2.4 billion, while software license updates and support revenue grew seven percent to $4.3 billion. The numbers reflect how companies are moving away from complexity and welcoming cloud applications which can reduce expenses. Oracle stock has already appreciated since it traded below $26 per share in May. Nevertheless, with the company's outlook and improved prospects for its hardware business and expansion into cloud computing, the company's stock could see additional appreciation in the near term. Oracle brass is confident given the prospects of the company and the prominent position Oracle holds in the industry. According to CEO Ellison, the company's Oracle 12c "will help our cloud business, it will help all of the cloud companies that depend on the Oracle database and we will be very, very attracted to our enterprise customers. So, I think it will drive growth the Oracle database for the next several years." Other News About ORCL Oracle to Pay Three of Next Year's Dividends This Year Company will pay out three dividends on December 21st. Oracle CEO to Experiment on His Hawaiian Island Larry Ellison plans to use private island as a "little laboratory." Other Stocks in the News Google Antitrust Decision by FTC Delayed Until Next Year Results of the FTC's investigation to be announced in the new year. Apple's Capex to Soar Despite Lowered iPhone Output Citibank says company's capital expenditures to rise. Copyright 2012 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Dec 19, 2012
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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