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Oracle 1Q meets estimates
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September 14, 1999: 6:41 p.m. ET
Software maker reports net income of $237 million; revenue climbs 13%
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NEW YORK (CNNfn) - Oracle Corp. recorded a 21-percent gain Tuesday in its fiscal first-quarter profit, matching analysts' estimates, but its shares plummeted in after-hours trade as investors reacted to a slowdown in growth for the firm's software license revenues.
The Redwood Shores, Calif.-based company earned $237 million, or 16 cents a share, for the quarter, matching the consensus estimate of analysts polled by First Call Corp. The results marked the first time in seven quarters that Oracle didn't beat forecasts by at least 2 cents a share. Revenue climbed to $2 billion.
Oracle (ORCL) outpaced its year-ago performance, when it logged a profit of $195 million, or 13 cents a share, on $1.7 billion in revenue.
"Based on our current pipelines the entire management team believes that the overall year should be very strong," said Larry Ellison, Oracle's chairman and chief executive officer. "Specifically we expect that Oracle's software sales will grow faster this year than last. And margins should continue to improve as well."
Oracle recorded software license revenue of $632.2 million, up 9 percent from last year's levels but a far cry from the 22-percent growth it posted in the fourth quarter.
Database sales grew 8 percent, while applications software sales climbed 11 percent.
Jeff Henley, Oracle chief financial officer, acknowledged that revenue growth was "a little slower than we would have liked," but he emphasized that the company's business outlook remained healthy.
Oracle shares fell 5/16 to close at 45-7/16 prior to the earnings announcement, which the company released after the market close. Its shares plunged to 39-3/4 in after-hours trade after the company released the report.
Oracle shares since last-year's fiscal first quarter results
Jean Orr, an analyst at Nutmeg Securities, shrugged off the slowdown in license revenue, noting that the figures reflected typical seasonal patterns. She added, however, that Oracle's 16-percent services revenue growth was "less than what I was looking for."
Orr maintains a "hold" rating on Oracle.
Art Russell, an analyst at Edward Jones, also attempted to deflect any notion that Oracle's license revenue growth was cause for alarm.
"Oracle's fourth quarter was very strong, and they may have pulled some business into that quarter at the expense of this quarter," said Russell, who maintains a "strong buy" rating on Oracle's stock.
Like other technology firms, Oracle is in the midst of transforming its business model to take advantage of the Internet. Ellison had previously set a goal of saving $1 billion as the company moves to an e-business model.
Henley said the company expects to generate as much as 80 percent of its revenue through e-commerce within the next 18 months.
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