Oracle share price up, results hit by robust dollar

Oracle Corp reported flat revenue for the fiscal third-quarter on Tuesday as the software company struggles to cope with the stronger dollar.

The Redwood City, California-based company reported sales of $9.3 billion during the three months ended February 28, unchanged compared to the same period a year earlier.

The company contributed the results to the recent rise of the dollar, which devalues the companys revenue generated outside the U.S., and said the revenue climbed 6% on a constant currency basis. In comparison Wall Street analysts surveyed by Thomson Reuters were expecting sales of $9.46 billion.

The company stated a robust performance of its new “cloud” businesses, which were up 29% to $527 million, 33% up excluding currency shifts. Although the sales generated from Oracles services over the internet are still just a fraction of the overall revenue, many analysts project strong growth opportunities for the cloud technology.

Additionally, the company said it had sold nearly $200 million of its new Cloud software-as-a-service(SaaS) and platform-as-a-service(PaaS) business in the past three months and projected the figure to go up to $300 million in the next quarter.

“For every million dollars of license we sell, we expect to collect another million dollars of support over five years for a total of $2 million,” co-CEO Safra Catz said. “While for every million of PaaS we sell, we actually expect to collect $5 million over five years.”

The company said revenue from new software licenses dropped 7% during the reported period to $1.98 billion, or 23% of overall sales. Excluding currency shifts, the metric would have been flat, Oracle said.

All-in-all the company reported a net income of $2.5 billion, or $0.56 per share, compared to $2.57 billion, or again $0.56 a share, a year earlier. On a constant currency basis, net income was up 7%.

The company also announced it would boost its cash dividend from $0.12 to $0.15 per share. Oracles said its founder and largest shareholder Larry Ellison, who stepped down from the helm in September to become chief technology officer and chairman, did not participate on the dividend vote.

“I think our hyper-growth in the cloud comes as a big surprise to a lot of people,” said Co-CEO Mark Hurd, who also projected Oracle to outsell other cloud service providers in the next quarter.

Oracle dropped 1.24% on Tuesday and closed at $42.87 in New York, marking a one-year increase of 12.17%. The company is valued at $190.63 billion. On Wednesday the stock gained 1.66% to $43.58 during after-hours trading.

According to the Financial Times, the 34 analysts offering 12-month price targets for Oracle have a median target of $47.25, with a high estimate of $52.00 and a low estimate of $34.00. The median estimate represents a 10.22% increase from the last closing price.