NEW YORK (Reuters) - Wall Street may have underestimated a recovery in corporate spending, judging by stronger-than-expected results and outlooks from business software maker Oracle Corp and technology services firm Accenture Plc.
Together with stronger-than-expected sales from BlackBerry maker Research in Motion, the announcements showed Cisco Systems Inc’s weak outlook last month may have been a lone phenomenon, analysts said.
Shares in Oracle jumped 5.5 percent to $31.97, while Accenture jumped 8 percent to $50.43 in noon trading on Friday. The companies issued their results after the market closed on Thursday.
“It seems that enterprise demand is not only holding up well through the year-end, which has been our expectation and prior view, but is actually improving, which is above our expectations,” said Louis Miscioscia, analyst at Collins Stewart.
Oracle announced solid quarterly results and forecast profit in the current quarter to exceed Wall Street estimates. Analysts noted strong sales of its Exadata family of integrated software and hardware systems.
That prompted some analysts to raise their price targets on the shares. BofA-Merrill Lynch raised its target to $36 from $34.
Susquehanna Financial, which said Oracle’s “meaningful upward revisions to estimates suggest that the company continues to benefit from a macro economic recovery, most notably in the United States,” raised its target to $33 from $30.
Technology outsourcing and consulting firm Accenture said clients were starting to step up investments to position themselves for an economic recovery and to keep up with new technology like cloud computing.
“There’s less hesitation than there was,” Chief Executive William Green told Reuters. “And there’s a lot of things companies need to do.”
The company, which helps businesses cut costs and improve operations through consulting, outsourcing and other technology services, reported higher-than-expected quarterly revenue and earnings. It also raised its full-year outlook for fiscal 2011.
“We believe this report is another data point validating the recovery of enterprise IT spending,” said Stifel Nicolaus analyst David Grossman.
BlackBerry maker RIM, considered another benchmark for business spending due to the device’s popularity among office workers, also reported stronger-than-expected sales.
On a conference call following RIM’s earnings, co-CEO Jim Balsillie also said the company was seeing pent-up corporate demand for its PlayBook tablet, which will launch in early 2011.
RIM is pitching the tablet at its core corporate and government customers who have a greater need for security credentials.
But some analysts were cautious, picking over RIM’s position in the saturated U.S. smartphone market and the company’s rising inventory levels. Morgan Stanley analyst Ehud Gelblum warned that “an inventory correction looms.”
But its Nasdaq-listed shares rose 2.3 percent to $60.60, while they rose 2.8 percent to C$61.30 on the Toronto Stock Exchange.
Reporting by Ritsuko Ando; Additional reporting by Alastair Sharp in Toronto; Editing by Tim Dobbyn