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.
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.