Oracle (ORCL) Tanks After More Disappointing Software Sales

By Jeffrey Moraes and John Darsie, T3Live Jun 21, 2013, 5:22 PM 

Oracle (NASDAQ:ORCL): The software giant met bottom-line EPS expectations but fell short of revenue estimates in it’s earnings report after the closing bell Thursday. The most troubling aspect of the report was the disappointing sales in software sales and subscriptions, which missed estimates for the second straight quarter. Oracle is currently down 9.33% on the day, despite announcing that it will double its quarterly dividend to 12 cents a share and enter into a $12B share buyback program. Oracle also announced that it will also move from being listed on the Nasdaq to the NYSE.

EPS Results

Actual $0.87 vs. Expected $0.87
Grew 6.1% year-over-year
Revenue Results
Actual $10.96B vs. Expected $11.12B
Grew 0.41% year-over-year

Guidance

EPS Q1 2014: Actual $0.58 vs. Expected $0.58 (Unchanged)
Earnings per share in the current fiscal year: Actual $2.69 vs. $2.68

Key Takeaways from Conference Call

CEO Larry Ellison: “We sold over 1,200 engineered systems in the quarter and over 3,000 during the year. Our fast growing engineered systems business is now more than one-third of our overall hardware business which is one of the reasons we believe hardware will be a growth story in Oracle’s FY14.”

Taking a Look at the Chart

Pattern: Challenging long-term uptrend, short-term broken

Oracle (ORCL) reported weak sales of its flagship software subscription product for the second straight quarter and fell short of revenue expectations, triggering a massive gap and go to the downside today. In the short-term, the stock is broken and will need to fill most of the gap to prepare. ORCL is coming down into a long-term uptrend line, so it will need to hold that to maintain any bullish composure. A break of that trendline could trigger additional momentum to the downside.

(click to enlarge)

Potential Sympathy Trades – Stocks in the Same Sector

Hewlett-Packard Company (NYSE:HPQ)
CA, Inc. (NASDAQ:CA)
Intel Corporation (NASDAQ:INTC)
Microsoft Corporation (NASDAQ:MSFT)
Red Hat Inc., Inc. (NYSE:RHT)

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