Oracle profit forecast fails to impress; shares fall

(Reuters) - Business software maker Oracle Corp on Wednesday delivered a third-quarter profit forecast that did not quite meet analysts’ expectations, and the company’s shares fell about 1 percent in extended trading.

The company logo is shown at the headquarters of Oracle Corporation in Redwood City, California February 2, 2010. REUTERS/Robert Galbraith

Oracle forecast third-quarter profit of about 63-66 cents per share, with revenue flat or up 3 percent which translates to $9.33 billion-$9.61 billion. The company’s shift from licensing software to cloud-based subscriptions has squeezed its margins.

Analysts on average were expecting profit of 65 cents per share on revenue of $9.28 billion, according to Thomson Reuters I/B/E/S.

“This is a softer outlook than the Street was expecting and speaks to the massive growth challenges ahead,” FBR Capital Markets analyst Daniel Ives said.

Oracle, like other established technology companies, has been moving its business to the cloud-based model, essentially providing services remotely via data centers rather than selling installed software.

In the second quarter ended Nov. 30, revenue from the company’s cloud-computing software and platform service rose 34 percent to $484 million.

Total revenue fell 6.3 percent to $8.99 billion, missing analysts average estimate of $9.06 billion, according to Thomson Reuters I/B/E/S.

Oracle’s second-quarter net income fell to $2.2 billion, or 51 cents per share, from $2.5 billion, or 56 cents per share, a year earlier.

Excluding items, it earned 63 cents per share, beating average analysts’ estimate of 60 cents per share.

Up to Wednesday’s close, Oracle’s stock had fallen 13.5 percent this year.

Reporting by Kshitiz Goliya in Bengaluru; Editing by Savio D’Souza and David Gregorio