Oracle Corp reported stronger-than-expected quarterly profit on Monday, releasing the results three days ahead of schedule after news of the pending departure of a senior sales executive fueled concerns that business was stagnating.
While the departure of senior sales personnel, particularly at the end of a quarter, can often signal weaker sales, the exit of the executive in question, Keith Block, appeared linked to criticism of Oracle co-president Mark Hurd and the company’s Sun Microsystems division in internal communications.
“The things he said about his boss and the things he said about the company are very damaging. At some point, Oracle has to deal with that,” UBS analyst Brent Thill said. “They moved on.”
Block, executive vice president for Oracle’s sales and consulting groups in North America and a 26-year Oracle veteran, was leaving the company, a person familiar with the matter said.
Oracle, the world’s No. 3 software maker, did not officially confirm his departure, but it became apparent in a call with analysts that other executives would be assuming his responsibilities. Block could not be reached for comment.
Oracle, whose chief rivals are Hewlett-Packard Co, Microsoft Corp and International Business Machines Corp, said fourth-quarter results were helped by a 7 percent jump in new software license revenue to US$4 billion.
It also said new software sales growth in the current quarter should be flat to 10 percent higher, despite fears of further weakening in technology spending as the eurozone crisis deepens and US job creation stagnates.
“Everything stayed really strong,” Oracle co-president Safra Catz said during a call with analysts. “It was kind of two stories, what we were seeing in the news and what we were seeing in our business.”
Excluding items, the company earned fourth-quarter profit of US$0.82 a share, outperforming the US$0.78 forecast of analysts polled by Thomson Reuters I/B/E/S.
However, its ailing hardware business inherited through its acquisition of Sun Microsystems, remained a drag, with hardware product sales diving 16 percent to US$977 million.
Although Oracle chief executive Larry Ellison has said he expects hardware revenue and margins to grow during the current financial year, Oracle forecast first-quarter hardware sales would decline between 7 percent and 17 percent from a year earlier.
Rumors of Block’s departure had pushed Oracle shares down 2 percent in NASDAQ trading on Monday, but the stock recovered and was up 3.5 percent after hours at US$27.90 on the forecast-beating earnings. The company also authorized an extra US$10 billion for share buybacks.