SAN FRANCISCO (AP) — Business software maker Oracle Corp. will get a chance to win back the confidence of disillusioned investors with the release of its latest quarterly results.
WHAT TO LOOK FOR: The report, due out Thursday after the stock market closes, comes amid mounting worries about Oracle's ability to grow while facing tougher competition from a new breed of software rivals that sell monthly or annual subscriptions to lease programs that can be accessed on any machine with an Internet connection. Oracle is trying to adapt by buying small software makers specializing in the leasing concept, known as "cloud computing," but its recent performance has raised questions about whether its evolution will prove successful.
The latest troubling sign came three months ago when Oracle's earnings for its previous quarter fell below analyst projections that steer Wall Street's expectations. It marked the second time in three quarters that Oracle had turned in disappointing quarterly results. Investors punished Oracle for the last letdown with a sell off that drove down the company's stock 10 percent the day after the numbers came out in March.
Oracle's stock price is still 4 percent below where it stood before the last quarterly report came out. The Standard & Poor's 500 index, a stock market benchmark, has climbed 5 percent during the same stretch.
The backlash could be even more severe if Oracle faltered again. That's because the report coming out Thursday covers the busiest period of the year — its fiscal fourth quarter, a three-month period ending in May.
Oracle's management blamed the company's problems earlier this year on poor execution by its sales staff, rather than a significant decline in customer demand. The company, which is based in Redwood Shores, Calif., promised to clean things up to get its software sales humming again.
To gauge how well the company is doing closing deals, investors typically focus on the growth of Oracle's new software licenses and cloud computing subscriptions. The mid-range of Oracle's forecast for the fiscal fourth quarter called for a 6 percent increase in software licenses and subscriptions from the same time last year.
To help boost Oracle's stock price, some analysts think the company should step up its commitment to back its own shares or raise its current quarterly dividend from its current rate of 6 cents per share. Other major technology companies, such as Microsoft Corp., Intel Corp, Cisco Systems Inc. and IBM Corp., have recently pledged to spend more buying their stock or raising their dividends.
WHY IT MATTERS: Oracle's database software is essential for running a wide range of online services and its other products automate many different administrative tasks in offices around the world. The company's financial performance is also viewed on Wall Street as a bellwether that can have a ripple effect on the stocks of other business-software makers.
WHAT'S EXPECTED: Analysts polled by FactSet expect earnings of 87 cents per share, excluding charges for past acquisitions and other costs, on revenue of $11.1 billion.
LAST YEAR'S QUARTER: Oracle posted adjusted earnings of 82 cents per share on revenue of $10.9 billion at the same time last year.