Top Of The Order:
Oracle’s Balancing Act: As far as Oracle is concerned, “TGIF” should be re-christened as “TGIFO,” as in “Thank Goodness It’s Finally Over.” At least when it comes to the Oracle’s feelings about how investors reacted on Friday to the software giant’s latest earnings report.
Oracle shares fell almost 5 percent to end the day at $38.92. It was the lowest closing point for Oracle’s stock in almost three months.
There was really no surprise about why Oracle’s stock took such a hit. Investors didn’t like what they saw in the company’s fiscal first-quarter results, which came out late Thursday. For the quarter ended in August, Oracle earned $1.83 billion, or 43 cents a share, on revenue of $8.6 billion. During the same period a year ago, Oracle earned $1.75 billion, or 40 cents a share, on $8.45 billion.
However, excluding one-time items, Oracle earned 55 cents a share, which fell short of the estimates of analysts surveyed by Thomson Reuters, who forecast Oracle to earn 58 cents a share on $8.7 billion in sales.
Oracle has been putting more of its emphasis on cloud-based software and services so it can compete better with the likes of Salesforce.com and Workday. Oracle founder, Chairman and Chief Technology Officer Larry Ellison also used a conference call late Thursday to say that Oracle’s “new data centers give us a significant cost and performance advantage over Amazon” and its web services business.
But that didn’t matter for much in the minds of investors.
Revenue from cloud computing climbed 59 percent from a year, but hardware sales fell 12 percent, new software license revenue was down 11 percent and total software sales were flat with the same period a year ago.
“Attaining the balance (with cloud and other sales) continues to be tricky,” said UBS analyst Brent Thill in a research note about Oracle’s results. “Progress (in its cloud business) is clear, encouraging, and largely incremental. (But) this continues to come with an inferior (profit) margin profile,” with regards to its traditional software business. Thill also questioned if the “real compression” on Oracle’s earnings is yet to come.
A few more quarterly reports like Thursday’s will give some more evidence about Oracle’s earnings. At least on Friday, Oracle’s shareholders showed how compressed their sentiment about the company had become.
Middle Innings:
Meanwhile, With Intel…: While Oracle let out a figurative sigh when the stock market closed Friday, Intel probably would have been happy if trading could go on all weekend.
That’s because on Friday, before the stock market opened, Intel raised its business outlook for its fiscal third quarter. Intel said that it now expects sales in the three-month period to be between $15.3 billion and $15.9 billion, which is higher than the company’s earlier forecast for revenue between $14.4 billion and $15.4 billion.
Intel said it raised its sales outlook primarily because of “replenishment of PC supply chain inventory,” and “the company is also seeing some signs of improving PC demand.”
And demand for Intel’s stock was strong all day Friday. Early in the day, Intel’s shares touched $38.05, their highest point in 15 years. By the time the stock market closed, Intel’s shares had risen 3 percent to end the week at $37.67.
What a concept. Good, old-fashioned PC sales getting better? Somebody must be doing some early Christmas shopping.
Bottom Of The Lineup:
Here’s a look at how some other leading Silicon Valley stocks did Friday…
Movin’ On Up: Gains came from Depomed, QuinStreet, GoPro, Aviat Networks and Twitter, which saw its shares climb more than 4 percent following its first live-stream of an NFL game on Thursday night.
In The Red: Decliners included Synaptics, Extreme Networks, Nimble Storage, Ultra Tech and Super Micro Computer.
The tech-focused Nasdaq Composite Index shed 0.1 percent to close at 5,244.57.
The blue chip Dow Jones Industrial Average gave up 0.5 percent to finish the week at 18,123.80.
And the broad-based Standard & Poor’s 500 Index lost 0.4 percent to fall to 2,139.16.
Quote Of The Day: “President Barack Obama was born in the United States.” — Republican presidential candidate Donald Trump.
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