Why Oracle Corporation (NYSE: ORCL) stock is falling

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Oracle Corporation (NYSE: ORCL) stock fell over 3.5% in the pre-market session on 15th March, 2019 (as of 8:11 am GMT-4; Source: Google finance) after  the company posted current-quarter revenue below analysts’ estimates. Oracle has been slower than some of its rivals to develop cloud-computing technology — services customers rent on demand over the web. That has put competitors in a better position to win business as customers shift away from managing their own computing operations.

Oracle Corporate Headquarters

REDWOOD CITY CA/USA – MAY 31 2014: Oracle corporate headquarters in Silicon Valley. Oracle is a computer technology corporation specializing in database management systems.

Non-GAAP operating income was $4.3 billion, up 5% from last year, and the operating margins were 44%, up from 43% last year. Over the last four quarters, capital expenditures were $1.6 billion and free cash flow was $13.2 billion, down 1% due to timing differences of tax payments and working capital items. ORCL has more than $40 billion in cash and marketable securities.  Profit came to $2.75 billion, compared with a year-earlier loss of $4.05 billion that included a one-time $6.9 billion charge related to the then-new U.S. tax law.

ORCL in the third quarter of FY 19 has reported the adjusted earnings per share of 87 cents, beating the analysts’ estimates for the adjusted earnings per share of 84 cents, according to FactSet survey. The company had reported 0.7 percent fall in the adjusted revenue to $9.61 billion in the third quarter of FY 19, beating the analysts’ estimates for revenue of $9.59 billion. The revenue declined as the company continues to struggle adapting its business for the cloud era.

The business also had successful sales in its cloud services and license support segment as revenue reached $6.66 billion, above the $6.64 billion that analysts aimed for. Cloud license and on-premise license had sales of $1.25 billion, above the guidance as well.

For its fourth quarter of its fiscal 2019, Wall Street analysts see the software manufacturer compiling $11.14 billion in sales to go along with a profit of $1.05 per share. Non-GAAP EPS in constant currency is expected to grow between 15% to 19%, and be between $1.08 and $1.12 in constant currency. So for Q4, total revenues are expected to grow 1% to 3% in constant currency and zero to negative 2% in U.S. dollars.

ORCL has increased the quarterly dividend 26% from $0.19 to $0.24 per share. Oracle has spent $10 billion in this quarter, buying back 206 million shares, which marked the fourth consecutive quarter in which repurchases hit $10 billion or more.

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