Oracle Corporation (ORCL) 4Q Earnings: What To Expect

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Oracle Corporation (ORCL) 4Q Earnings: What To Expect
By Sanatan2014 (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Oracle Corporation (NYSE:ORCL) will report its fourth quarter earnings on Thursday, June 19, 2014, and Wall Street is optimistic on the numbers. Although the consensus estimate has remained unchanged over the past month, it’s up from the 91 cents estimate three months ago.

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Analysts optimistic on Oracle

For the quarter, analysts expect Oracle Corporation (NYSE:ORCL) to report earnings of 92 cents a share, up from 84 cents last year. Revenue is expected to come in at $11.48 billion for the quarter, up 5% from $10.95 billion last year. For the fiscal year, analysts expect earnings of 2.78 per share on revenues of $38.46 billion.

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For the third quarter, Oracle Corporation (NYSE:ORCL) posted weak numbers for both earnings and revenues, which were lower than the analysts estimate. However, for the fourth quarter, the company gave a more sanguine guidance with earnings expected in the range of 92 to 99 cents, compared to last year’s number of 87 cents.

In the third quarter, Oracle Corporation (NYSE:ORCL) witnessed a drop in revenue. Prior to this, the company has witnessed a rise in revenue for three straight quarters. Net income for the company has come down in the last two quarters. In the third quarter, the income was down 33% year over year while in the second quarter, a drop of 1% was witnessed.

Oracle has a consensus rating Buy from almost 65% of the analysts covering the stock.

Positives and negatives

Over the past two years, patient investors have reaped solid returns. Shares have moved up significantly from $28 in June 2012 to about $42 as of June 16, 2014. However, now the company faces the same uphill battle as faced by bigger players like Cisco, IBM, HP and SAP AG, which is to sell hardware and/or software to enterprises. Analysts say this mature market no longer offers high-growth potential.

On the positive side, Oracle Corporation (NYSE:ORCL) has a strong and innovative product portfolio along with strong potential in the cloud and Big Data. Furthermore, strong subscription revenues will provide the company with a long-term high-margin revenue base.

Recently, there have been reports that Oracle Corporation (NYSE:ORCL) is close to announcing the acquisition of Micros Systems, a maker of software and point-of-sale devices for restaurants, hotels and retailers. The deal is rumored to be valued at more than $5 billion.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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