Oracle Corporation (NYSE:ORCL) has published its financial results for the fourth quarter and the full fiscal year 2014, and though the company had been trying hard to retain the confidence of the investors, it couldn’t and the stock prices dropped over 6% in the aftermarket trading today.
Let’s find out what disappointed the investors. First of all the EPS was estimated about $0.95 for Q4 and $2.90 for the full fiscal year, which the company missed. The EPS amounted to $0.80 for Q4 and $2.38 for the full fiscal year, which is way below the estimates. The Q4 total revenue was up by a mere 3 % on the year to $11.3 billion. Though the revenues from SaaS (Software as a Service) and PaaS (Platform as a Service) look good in terms of percentage growth, the actual contribution to the total revenue is negligible. In the era where most companies are moving towards the cloud, lesser revenues from cloud indeed raise doubts.
CFO Safra Catz stated that the subscription rate for cloud is going to increase and that it’s growing at a rate of $2 billion per year, while Mark Hurd, President of Oracle Corporation (NYSE:ORCL) said:
“We have transformed Sun’s commodity hardware business into a profitable and growing Engineered Systems business,”
At the same time, the CEO of the company, Larry Ellison mentioned that Oracle has become the second-largest company in the ‘Software as a Service’ segment (SaaS), being outrun only by salesforce.com.
“In IaaS we’re larger and more profitable than Rackspace. We have by far the most complete portfolio of modern SaaS and PaaS products in the industry: CRM: Sales, Service & Marketing; HCM: HR, Payroll & Talent; ERP: Accounting, Procurement, Supply Chain & more. All these SaaS products run on the world’s most powerful PaaS: the Oracle in-memory multitenant database and Java. We plan to increase our focus on the Cloud and become number one in both the SaaS and the PaaS businesses,” Ellison said.
The company also declared a cash dividend of $0.12 per share of the outstanding common stock which will be paid to the stockholders on July 9.
Oracle Corporation (NYSE:ORCL)’s revenues from hardware systems contributed about $1.5 billion and its just 2% up as compared to the previous quarter. Out of this $870 million is from hardware products and $596 million is from the hardware support. The growth rates are not very attractive if you are looking to invest in the company.
The key investors in Oracle Corporation (NYSE:ORCL) are Harris Associates with about 68 million shares as of 31st March 2014 and Eagle Capital Management with approximately 45 million shares.