|By Maureen O'Gara||
|March 21, 2013 02:00 AM EDT||
Oracle, which was promising growth in its third fiscal quarter, missed across most product categories and all regions except, perversely, EMEA.
Its stock dropped close to 8% after-hours to $35.76.
It blamed its salesforce for its poor showing.
Co-president Mark Hurd, the former CEO of HP, has hired 4,000 new sales people in the last 18 months and Oracle says they’re not acculturated yet and displayed little urgency about the quarter, transferring their ambitions to Q4, historically Oracle’s biggest quarter.
Oracle co-president and CFO Safra Catz; Oracle has $33.4B in the bank
Guess we’ll see how this “new sales reps ran out of runway” story stands up soon enough. Hurd must need a whip.
Apparently a bunch of contracts that couldn’t be closed in Q3 slipped over into Q4 and CEO Larry Ellison said some of them are already locked and loaded.
Since Oracle is something of a barometer of tech spending, it claimed its issues were unique to the company and not a macro crisis.
It said it didn’t “help that the sequester deadline [was] on the last day of our quarter, and so that [had] a little bit of an impact here in North America, but not necessarily anywhere else.”
The taste of low government and corporate spending still lingers in many mouths because confidence is toast.
Overall Oracle’s revenue came in 1% short at $8.96 billion, but minus 4.4% by some calculations. It should have been good for $9.38 billion, Wall Street figured.
Earnings were flat at $2.5 billion or 52 cents a share. Adjusted earning were 65 cents, a penny short of punters’ expectations.
Oracle’s new software sales and cloud software subscriptions dropped 2% to $2.3 billion. It had promised they would be up 3%-13%. Hurd said Oracle’s
SaaS revenue grew well over 100% and Ellison claimed to be winning against Workday and Salesforce.com but allowed that the sector is still a small business. Oracle broke out its cloud results at $238 million.
Total software revenue was up 4% to $6.67 billion but hardware fell to a mere $671 million from $869 million this time last year though Oracle thought it would stay flat or fall no more than 10%.
Services revenue fell 8% to $1.045 billion.
In a statement and again on the conference call co-president and CFO Safra Catz bragged about the company’s 47% non-GAAP operating margin, which she expects to hit an all-time high this year. “Both operating cash flow and free cash flow were at record levels for a Q3,” she said, “with operating cash flow of $13.7 billion over the last 12 months.”
During the conference call Oracle predicted a return to growth this quarter citing a bulging pipeline. It figures it can muster a 1%-11% increase in new software licenses and cloud subscriptions.
Hardware sales, which are said to stand at 5,000 appliances since the beginning, and 800 units this past quarter, are supposed to see traction next week when Oracle announces its new T5 Sparc boxes but the company still forecast Q4 hardware revenues at minus 2% to minus 22% despite the 17 record benchmarks it’ll have in hand on Tuesday. Ellison said the hardware turnaround may have to wait for fiscal Q1, which started in June.
Total Q4 revenue it figures will work out to minus 1% to up 4% with GAAP earnings of 72 cents-78 cents; non-GAAP 85 cents to 91 cents.
Ellison said Oracle is going to focus on dominating telcos, financial services and retail.
Oracle has $33.4 billion in the bank.