Farallon Capital sells stake in Oracle Corp.
Highlights of Farallon Capital's 3Q14 positions (Part 11 of 12)
Oracle Corp. position
Farallon Capital Management sold its position in Oracle Corp. (ORCL) during the third quarter. The stock accounted for 1.59% of the fund’s total 2Q14 portfolio.
Overview of ORCL
Oracle Corp. is an enterprise software company that develops, manufactures, markets, distributes, and services database, middleware, and applications software.
In November, SAP said it will pay Oracle $359 million against Oracle’s $1.3-billion damages claim regarding unauthorized software downloads. The agreement ended a seven-year-old dispute.
Change in management and sales force
In September, Larry Ellison stepped down from his position as Oracle’s CEO. He remains the executive chairman and chief technology officer. Current presidents Safra Catz and Mark Hurd jointly hold the company’s CEO position.
Matthew Mills, head of North American sales, quit in November. Adrian Jones, who had headed Oracle’s Asia Pacific sales, left in June.
In addition to the five abovementioned executives, a number of senior sales managers have left Oracle in recent periods.
Recent acquisitions
In September, ORCL completed its $4.6-billion purchase of Micros, a provider of integrated software and hardware solutions to the hospitality and retail industries.
In July, Oracle acquired TOA Technologies. TOA makes software for companies that focus on field services in the cloud space.
1Q15 results
Oracle’s first-quarter revenues of $8.6 billion and non-GAAP EPS (earnings per share) of $0.62 did not meet analysts’ expectations for $8.72 billion in revenue and $0.64 in non-GAAP EPS. GAAP EPS was $0.48, up 2% on a year-over-year basis.
Here are some other details of Oracle’s first-quarter results:
Total software plus cloud revenue was up 6% to $6.6.
SaaS (software-as-a-service) and platform-as-a-service (PaaS) cloud revenue was up 32% to $337 million.
Infrastructure-as-a-service (IaaS) cloud revenue was up 26% to $138 million.
Hardware systems revenue was down 8% to $1.2 billion.
Overall, the cloud services business grew by more than 30% to $475 million in revenue.
Th internally developed Fusion cloud applications business grew at a rate of nearly 200%.
Share repurchase and dividend
During the quarter, Oracle repurchased nearly 49 million shares for $2 billion. The board of directors recently authorized the buyback of an additional $13 billion in shares.
Oracle declared a quarterly dividend of $0.12 per share.
2Q15 expectations
The company expects total revenue growth to range from 0% to 4% in US dollars for the second quarter of 2015. Oracle anticipates GAAP EPS of between $0.51 and $0.55.
To learn more, read Market Realist’s in-depth review of Oracle’s 1Q15 earnings .
Other Farallon positions in 3Q14
Farallon Capital Management started new positions in Time Warner Inc. (TWX), Tim Hortons Inc. (THI), International Game Technology (IGT), and Cognizant Technology Solutions (CTSH) during the third quarter. The fund increased its positions in DIRECTV (DTV), Covidien plc (COV), Allergan Inc. (AGN), and Shire plc (SHPG). Positions sold by Farallon during the third quarter include Yahoo! Inc. (YHOO), and Weyerhaeuser Co. (WY).
Farallon’s position change in Weyerhaeuser Co. will be the focus of the next part of this series.
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