Home Business Oracle stock rebounds following outlook, after earnings fall short of Street forecast

Oracle stock rebounds following outlook, after earnings fall short of Street forecast


Oracle Corp. shares recovered from a drop in the extended session Thursday after Wall Street forecasts for the fourth quarter fell within the database-software company’s headwinds-challenged outlook range.

Oracle ORCL,
+ 0.72%
shares, which had dropped as much as 8% after hours, recovered and were up 0.5% in the extended session following Oracle’s forecast. The share moves followed a 0.7% rise in the regular session to close at $ 76.65.

On the call with analysts, Oracle Chief Executive Safra Catz said the forecast assumes that the company’s $ 28.3 billion deal to acquire Cerner Corp. CERN,
does not close in the fourth quarter and that exchange rates do not change. The company expects a currency headwind of 2% to 3% on revenue.

Catz forecast fourth-quarter earnings of $ 1.35 to $ 1.39 a share on revenue growth of 3% to 5%, or $ 11.56 billion to $ 11.79 billion. Analysts surveyed by FactSet are forecasting $ 1.38 a share on revenue of $ 11.75 billion.

“Both non-GAAP and GAAP EPS are expected to decline year-over-year due to some large investment gains we saw last year, as well as a very low tax rate last year,” Catz said on the call. “It was 10.7%. Both of these mask the strong earnings growth and momentum we continue to see out of our core cloud business. ” Catz said the tax rate for the most recent results was 18.4%.

For the fiscal third quarter, Oracle reported net income of $ 2.32 billion, or 84 cents a share, compared to $ 5.02 billion, or $ 1.68 a share, a year ago.

Adjusted earnings, which exclude stock-based compensation expenses and other items, were $ 1.13 a share, compared to $ 1.16 a share in the year-ago period.

Revenue rose to $ 10.51 billion from $ 10.09 billion in the year-ago quarter.

Analysts had estimated earnings of $ 1.18 a share – based on Oracle’s forecast of $ 1.14 to $ 1.18 a share – and revenue of $ 10.51 billion.

Oracle shares are up 6% over the past 12 months, versus a 5% decline by the iShares Expanded Tech-Software Sector ETF IGV,
while the S&P 500 index SPX,
has gained 9% and the tech-heavy Nasdaq Composite Index COMP,
is virtually flat.

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