UPDATED 06:42 EDT / JUNE 19 2015

NEWS

Oracle misses analysts expectations, blames strong dollar

Oracle is the latest in a long line of struggling tech firms to point the finger of blame at the strength of the U.S. dollar, following a poor quarterly earnings report that missed analysts expectations.

Oracle announced its results on Wednesday, reporting adjusted earnings of 78 cents on revenues of $10.71 billion. But Wall Street was shooting for more, having estimated fourth-quarter earnings per share of 86 cents on $10.92 in revenues, according to Thomson Reuters’ consensus estimates. As a result, Oracle’s stock fell by seven percent in after-hours trading.

In a statement, the database giant put the blame squarely on currency fluctuations, saying results were “significantly impacted by the strengthening of the U.S. dollar compared to foreign currencies”. Indeed, Oracle claims its total Q4 revenues would have grown by three percent if not for the strong dollar, but instead they fell by five percent.

That’s a convenient excuse, but the more likely reason Oracle is suffering is due to the rapidly accelerating shift to the cloud. Oracle is trying to get there, and its software and cloud revenues for the quarter reached $8.4 billion, down six percent but up two percent in constant currency. More important though, software license sales dropped by 17 percent year-over-year, so perhaps that’s the real culprit.

Nontheless, Oracle’s management insisted it wasn’t concerned, pointing to cloud growth that it expects will soon bring in more revenues.

“We expect our rapidly increasing cloud sales to quickly translate into significantly more revenue and profits for Oracle Corporation,” Oracle CEO Safra Catz said in a statement. “For example, SaaS and PaaS revenues grew at a 34 percent constant currency rate in our just completed Q4, but we expect that revenue growth rate to jump to around 60 percent in constant currency this new fiscal year.”

As Oracle continues its transition to the cloud, analysts are watching to see if it’s able to grow its top-line revenues and take on firms like Salesforce.com, Inc., and Workday Inc., targets it mentioned in the call. Larry Ellison, Oracle’s Chairman and CTO, was sure that it will.

“We expect to book between $1.5 and $2.0 billion of new SaaS and PaaS business this fiscal year. That means Oracle would sell more new SaaS and PaaS business than Salesforce.com plans to sell in their current fiscal year—the only remaining question is how much more,” Ellison said in the release.

Of course, shareholders can be notoriously impatient when it comes to transitions, which is why Oracle is determined to accelerate cloud revenues in the next year, analyst Bill Kreher of Edward Jones told Forbes. The company wants to restore confidence as quickly as possible, Kreher said, as some investors are already getting spooked by its flagging results

“There’s some healthy skepticism reflected in shares trading down this evening, but if you peel back the U.S. dollars, results were relatively solid,” Kreher says.

To speed things up, Oracle will likely be making more acquisitions in the near future. Catz reminded investors that the company still has $54 billion in the bank, and said it was looking at possible deals if the price is right.

In other news, Oracle on Thursday announced its hired former Hewlett-Packard Co. executive Dave Donatelli to run its hardware business. Donatelli will be reporting to former HP CEO Mark Hurd, who shares the top job alongside Catz.

SiliconANGLE reported on Donatelli’s switch to Oracle last April, but at the time the company didn’t provide any details on his new role. Nevertheless, we speculated he might be assigned to lead Oracle’s hardware division given his previous experience, and now it’s been made official.

“Going to Oracle under Hurd makes a lot of sense,” Wikibon Principal Analyst Dave Vellante commented at the time. “Donatelli is a task master and fits the Hurd mold of no-nonsense.”

Donatelli is a veteran of multiple appearances on SiliconANGLE’s theCUBE. His most recent appearance was in June, 2013.

Image credit: Wikipedia

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