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Wall Street Beat: Despite Oracle earnings miss, software appears healthy

Adobe blows away expectations, Tibco banks on Big Data, and there's more good news for the smartphone market

By Marc Ferranti
June 20, 2014 12:17 PM ET

IDG News Service - An earnings miss by Oracle is usually enough to send tech market forecasters back to their spreadsheets with furrowed brows. But despite the enterprise software giant's weaker-than-expected financials, there was enough good news on the tech sales front this week to keep expectations for IT on the optimistic side.

Oracle's on-premises software license revenue declined in the company's fourth quarter ending May 31, leading to a 4 percent year-over-year dip in net income, to US$3.65 billion. Revenue edged up a paltry 3 percent, to $11.3 billion.

While SaaS (software-as-a-service) and PaaS (platform-as-a-service) revenue rose 25 percent to $322 million and IaaS (infrastructure-as-a-service) sales increased 13 percent to $128 million, those numbers were a little lower than analysts' high expectations for the company. Oracle has had success in the cloud-related enterprise market and CEO Larry Ellison claimed in the earnings announcement that it is now the second-largest SaaS company in the world, behind Salesforce.

The company seems to have enough momentum to keep the earnings drop from worrying market watchers too much. The quarter was a "modest disappointment," according to a research note from Deutsche Bank. But the investment company said Oracle is getting enough traction with its cloud software to warrant a "buy" rating on the stock. The bottom line, according to Deutsche Bank, is that the quarter was not a "thesis changer" for Oracle.

The story is similar for Tibco, the maker of middleware and business intelligence software. The company Thursday said that revenue for the quarter ending in May increased 3 percent year over year to $252.3 million, while net income dropped to $1.6 million from $8.7 million.

The company has had some trouble with sales execution recently. Still, on a pro-forma basis, excluding one-time items and certain accounting changes, earnings per share of $0.14 beat expectations of analysts polled by Thomson Reuters by $0.01, and sales beat estimates by almost $2 million.

There is still underlying confidence in the company's software lineup, geared to help businesses analyze the flood of real-time data pouring in from customers hooked up to all sorts of computing devices, including smartphones. "We feel it is poised for EPS growth in the comping year" said TheStreet Ratings Team in a post after the earnings announcement.

"We see a large and growing opportunity ahead of us in big data, where our technologies can integrate both static and real-time data sources to enable fast data solutions," said Tibco CEO Vivek RanadivA(c) in a statement. "These are systems that companies use to create more responsive and customized digital experiences for their customers, fostering greater loyalty and unlocking new avenues for revenue generation."

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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