Instant view: Oracle software, hardware results disappoint

Reuters News
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Posted: Dec 20, 2011 4:29 PM
Instant view: Oracle software, hardware results disappoint

(Reuters) - Oracle Corp fell well short of Wall Street's expectations on both hardware and software sales in its fiscal second quarter, wiping more than 8 percent off its shares.

Commentary:

MICHAEL NEMEROFF, ANALYST, MORGAN KEEGAN & CO

"The licensing revenue came in lower than expectations and that really drives most of the profitability at the company. That obviously is a disappointment.

"We need to figure out where the miss occurred geographically, because we suspect Europe might be the culprit, given their large exposure to Europe.

"Oracle has been doing well over the last couple of quarters so clearly this is not a fantastic signal to the markets.

"I would caution people not to make any grand generalizations about the health of the tech sector, because Oracle's quarter ended in November and Europe has been so volatile. The last couple of days in November could have been very weak in Europe, which could have caused a miss.

"Currency is a big negative for Oracle when the euro has gone down as quickly as it has over the last couple of months. That's a huge drag on their earnings and so we need to figure out what the currency impact is."

PETER GOLDMACHER, ANALYST, COWEN & CO

"Oracle has been amazingly consistent with their earnings. When they miss, it means people are re-thinking enterprise spending.

"Tech spending is more under pressure than people thought. IT budgets have been relatively flat, when you have issues like you do in Europe, people naturally pull back.

"Oracle is still the best horse in the glue factory, it's a well-run company, they will weather this better than other companies.

"Tech spending is going to be under pressure for a long time. Oracle is a solid core technology company but they are not in new growth areas such as software as a service, virtualization."

(Reporting by Nicola Leske in New York and Poornima Gupta in San Francisco)