Oracle closed down 2.3% on Thursday after reporting earnings with lower than expected guidance. Management guided 0-4% revenue growth for Q2 compared to the street’s expectations of 4.8% and earnings per share in the range of $0.60-$0.70 compared to analyst targets of $0.74.
Oracle’s management said the cause for the drag on revenues and earnings was the transition it has made from perpetual software licenses to a subscription model. However, it is confident that the recent acquisition of Micros Systems could add $15 billion in revenue for the next 12 months. Oracle also pointed to strength in its SaaS and PaaS subscription businesses.
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The company has faced significant competition in the area of cloud computing from Salesforce and SAP. Oracle bulls think that once the transition to subscriptions has been completed and the $5.3 billion Micros Systems acquisition is integrated, Oracle may have some upside.
