Oracle fails to meet the financial targets set of Fiscal Second Quarter – Part 2

Wednesday, December 21st, 2011 3:47:30 by

The company announced in addition that the board has approved of the repurchase of $5 Billion worth of common stock. Moreover, the company also mentioned that it has recruited around 1700 new employees in the first quarter of the fiscal year.

CFO Safra Catz told the media in clearance of not achieving the target:

  • Co-President said the company has been seeing an increase in required approvals for new deals at some customers, delaying completion of some contracts.
  • She also said there was a 2% negative currency hit in the quarter.
  • Revenues from U.S., Europe and Japan were all up a bit, flat or down in the quarter. Revenue in the Americas overall were up 1.8%; EMEA was up 0.6%; Asia/Pacific was up 8%.
  • Catz said hardware sales were hampered in part by a product transition.
  • The company has over $31 billion in cash and marketable securities.
  • The company bought back 33.1 million shares for a total of $1 billion in the quarter.

 However, the worst news of all has been the guidance for fiscal third quarter. The following is the excerpt from the announcement.

Guidance: In constant currency, the company sees new software license revenue growth from 2%-12% or 0%-10% in dollars. Hardware revenues are expected to be down 4%-14% in constant currency, or down 5-15% as reported. Total revenue is expected
to be up 3%-7% in constant currency, or 1%-6% in dollars. On GAAP basis, revenue is expected to be up 4%-7% on a constant currency basis, or 2%-5% in dollars. Non-GAAP EPS is expected to be 56-59 cents a share in constant currency, or 55-58 cents a share in
dollars. The Street has been projecting revenue of $9.46 billion – 7.4% growth on a non-GAAP, dollar basis – and non-GAAP EPS on a dollar basis of 59 cents. In short, the guidance also came in a little below Street forecasts.

The announcement resulted in further loss in the share price. In the after hours, the market value further tumbled $2.89, or 9.9%, to $26.28.

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