Oracle Corp beat Wall Street’s earnings estimates as new software sales came in at the high end of the company’s forecast, offsetting a sharp drop in hardware revenue.
The software maker’s stock rose 1.5 percent after the news, in sharp contrast to the sell-off three months ago when its second-quarter profit missed analysts’ forecasts for the first time in a decade.
“The software business bounced back,” Citigroup analyst Walter Pritchard said. “If you look at where the value is at Oracle, it would be the software business.”
Oracle estimated that new software sales this quarter would range from a 2 percent drop to growth of as much as 8 percent, translating into US$3.6 billion to almost US$4 billion. The midpoint of that forecast, of 3 percent growth, is a sharp drop from the 19 percent increase in the fourth quarter of last year.
Yet Oracle chief financial officer Safra Catz suggested in a conference call that the outlook may not be so grim. She said she had been “somewhat conservative” in calculating that forecast.
Still, shares in the company run by billionaire Larry Ellison pared half of the gains made earlier in the extended trading session. They had rallied 3 percent shortly after it posted earnings that beat Wall Street’s lowered expectations.
Catz also estimated revenue from hardware, a persistent weak spot for the software firm, at US$870 million to US$980 million. Some analysts had expected hardware revenue of more than US$1 billion as the company turns around the struggling division it got when it bought Sun Microsystems in 2010.
Oracle, the world’s No. 3 software maker after Microsoft Corp and IBM Corp, had forecast that new software sales would climb between 0 to 10 percent from a year earlier, when it last reported earnings on Dec. 20.
Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of Oracle’s future profits.
To be sure, the 7 percent growth posted in the third quarter is lower than in previous periods, which does not bode well for future earnings, said Kim Forrest, an analyst with Fort Pitt Capital Group.
“In fiscal 2011 they were in the double digits, and now they are in the single digits. That’s never a good trend,” she said.
The company also reported on Tuesday that hardware product sales fell 16 percent to US$869 million. It had forecast a decline of between 5 and 15 percent.
Oracle shares rose to US$30.55 in extended trade, after closing at US$30.10 on the NASDAQ.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”