Tuesday, July 27, 2021

SAP rival disappointed analysts Corona crisis weighs on Oracle business

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The cloud business is booming even in Corona times. But weak software demand broke down SAP’s competitor, Oracle’s sales in the past quarter. The result cannot convince either. The share price is suffering.

In the era of the coronavirus crisis, the pandemic consequences had a significant impact on the sales of the US software company Oracle. One of the main competitors of the Dax group SAP disappointed the expectations of the analysts. In the first reaction, the share price fell around six percent after the exchange.

Above all, weaker software demand due to the corona pandemic burdened Oracle. In the three months to the end of May, sales were down six percent year-over-year to $ 10.4 billion – about 9.2 billion euros. Net income decreased 17 percent to $ 3.1 billion.

Although the cloud business with IT services on the Internet continued to grow, the US company had to cut back on pandemics. The results have suffered from the fact that companies severely affected by the corona crisis postponed some orders, said CEO Safra Catz. Analysts had expected higher earnings, and the stock initially reacted with significant price losses.

Oracle CEO Safra Catz did not want to make a forecast for the coming year but believes that sales growth will accelerate as soon as the crisis is over.

Oracle reported a 17 percent drop in net income to $ 3.11 billion, or 99 (previous year: 1.07) cents per share, for the quarter just ended. Adjusted earnings were $ 1.20 (1.16) per share. Revenue decreased from $ 11.14 billion to $ 10.44 billion. Factset analysts had forecast earnings of $ 1.15 per share on sales of $ 10.61 billion.

For the full year, the SAP competitor reported earnings of $ 3.85 per share, up 9 percent year over year, with 1 percent lower total sales of $ 39.1 billion.

“Our overall business has done remarkably well given the pandemic,” said Catz, adding, “but our results would have been even better if it weren’t for the customers in the hardest-hit industries we serve, such as hospitality, retail, and transportation, have postponed some of their investments. “

For the current quarter, Oracle anticipates an increase in adjusted earnings to 84 cents to 88 cents per share compared to 81 cents in the previous year. Sales should either grow by 1 percent or shrink. According to Oracle, the estimate includes unfavorable exchange rates that burden sales with 1 percent. Analysts interviewed by Factset previously expected earnings of 85 cents per share on sales of $ 9.05 billion.

In early NYSE trading, the share price temporarily dropped 2.64 percent to $ 53.15 after the earnings report.

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