Oracle’s Q2 Earnings: Signs of Trouble for Tech Industry?
Oracle‘s stock (ORCL) fell roughly 8 percent in after-hours trading this evening. The hardware and software giant today announced fiscal Q2 2012 results that disappointed investors, despite rising sales of Exadata and Exalogic systems. Here’s the bigger question: Is Oracle facing unique challenges on its own, or do Oracle’s weak results foreshadow larger problems for the IT industry?
First, let’s not press the panic button. Oracle’s quarterly revenues were $8.792 billion and net income was $2.192 billion — not exactly a company in distress. Oracle remains wildly profitable despite some signs of stress in its core software and hardware businesses. Two examples, according to Reuters:
- Oracle’s new software sales rose only 2 percent from a year earlier to $2 billion during the quarter. Analysts, on average, were expecting new software sales of $2.2 billion, according to StreetAccount.
- Oracle hardware sales fell 14 percent to $953 million, below the average Street account forecast of $1.06 billion.
No doubt, Oracle’s strategy to push into the hardware business and “engineered systems” will draw plenty of scrutiny in the days ahead.
Some skeptics think Oracle will have a challenging time promoting its engineer system stacks — processors, servers, operating systems, databases and applications. Some of Oracle’s latest offerings seem to be selling well. Exadata sales rose 100 percent in the most recent quarter, and Exalogic sales grew more than 100 percent on a sequential basis, Oracle CEO Larry Ellison said in a prepared statement. But actual dollar figures tied to those percentage growth rates are difficult to find.
Oracle is doing its best to assure Wall Street that the company is well positioned to rally in the second-half of its fiscal year. One example: The company has added more than 1,700 sales professionals in the first half of fiscal 2012, noted President Mark Hurd, in a prepared statement.
Still, Oracle’s top-line results for Q2 fiscal 2012 disappointed investors. And the Oracle results surfaced one day after Red Hat’s earnings received a disappointing reception on Wall Street.
Hmmm… Happy Holidays? Not in the past 24 hours for the tech industry on Wall Street.