NEW YORK (AP) -- Oracle tumbled 8 percent in premarket trading Thursday after investors were caught off guard by declining sales at software company.
Despite the sell-off, which began late Wednesday after the company posted third-quarter earnings, many analyst stuck by Oracle.
Janney Capital Markets analyst Yun Kim called it a "one-time hiccup."
"Given the size and efficiency of its sales force, we note that sales execution issues typically do not linger more than a quarter at the company," Kim wrote. "Hence, we expect its business to rebound in the current (fourth quarter) , which is (Oracle's) seasonally strong and historically its best performing quarter."
Oracle also blamed a lackluster performance by its expanding sales force, rather than a lack of demand.
Hardware systems revenue dropped 16 percent. Revenue from new software licenses and online, or "cloud," subscriptions fell 2 percent to $2.3 billion. The company had predicted that number would rise by 3 percent to 13 percent. Oracle, like other established software companies, is facing increasing competition from rivals that sell software as a subscription service rather than a packaged product.
Oracle expects new software license and online subscription revenue to grow by 1 percent this quarter to 11 percent. Total revenue is expected to range between a decline of 1 percent to an increase of 4 percent and adjusted earnings are projected at between 85 cents and 91 cents per share.
Analysts polled by FactSet expect adjusted earnings of 88 cents per share and revenue of $11.5 billion, an increase of 5 percent.
Citi analyst Walter Pritchard backed stood by his "buy" rating and $38 price target for the stock, saying that while there was nothing good in the third-quarter results, the guidance suggests improvement. He also predicted that the company will fix the execution problems it had in the third quarter.
Shares of Oracle Corp. fell $2.73 to $33 in premarket trading.
- Investment & Company Information