Oracle (ORCL) reported lower-than-expected quarterly earnings and revenue on Wednesday, with misses on new software sales and cloud-based subscriptions. The struggling hardware division again contracted sharply.
After the earnings announcement, the company's shares tumbled in extended-hours trading. (Click here to get the latest after-hours quote: ORCL.)
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"Generally it's a pretty big miss overall," said Brendan Barnicle, an analyst at Pacific Crest.
Net income rose slightly to $2.504 billion, or 52 cents a share, in the fiscal third quarter from $2.498 billion, or 49 cents a share, in the year-earlier period.
Excluding items, earnings rose to 65 cents per share from 62 cents a share in the year-earlier period.
Revenue decreased to $8.97 billion from $9.06 billion a year ago.
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Analysts had expected Oracle to report earnings excluding items of 66 cents a share on $9.38 billion in revenue, according to a consensus estimate from Thomson Reuters.
New software sales and Internet-based software subscriptions fell 2 percent to $2.3 billion, below the company's own forecasts.
Hardware system products revenue fell 23 percent to $671 million.
The world's No. 3 software maker had forecast a 3 to 13 percent jump in new software license and cloud subscription revenue. Investors scrutinize new software sales because they generate high-margin, long-term maintenance contracts and are an important barometer of future profit.
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"Pretty disappointing. Trying to find the silver lining here, looks like the software update and support business was better. But pretty disappointing on the hardware side of the business in particular. Came in at $671 million, consensus had been for $796 million. A pretty sizeable miss," Barnicle said.
"On the hardware side they're facing the same headwinds that everybody in the hardware industry is facing, as you get more consolidation and commoditization of hardware," he said.
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