The drop in revenues and profits in the traditional licensing business of Oracle Corp was not offset by the growth in its cloud services business as the company report worse than expected and short of its estimates for the most recently ended quarter, the company said on Thursday.
Additionally, the chairman of the company said that it was not immediately looking to hire any new co-CEO form the company.
The company was a late entrant into the fast growing cloud computing business and hence has been pushing aggressively to make fast inroads into the sector. The aim of the company was to slowly but surely move away from dependence on the more expensive traditional on-premise model.
To give shape to its plans of rolling out its cloud computing service to more locations in the world, Oracle has announced its plans to hire 2,000 additional workers. The aim of the company is to aggressively make inroads into this business sector as well as scale up enough o provide some competition to the market industry leaders in cloud computing which include the bigger rivals Amazon.com’s Amazon Web Services and Microsoft Corp.
There was a 7 per cent drop in the revenues of the company from its cloud computing service to more locations in the second quarter to reach $1.13 billion while there was an increase of 3 per cent in the revenues generated by the company from its cloud services and license support business at $6.81 billion.
That number was much lower than that of its rivals – with Amazon Web Services generating revenues of $8.99 billion, a 34 per cent year-over-year growth in the segment while a 36 per cent growth in the segment was reported by Microsoft’s cloud revenue at $11.6 billion in the October quarter.
“Oracle reported mixed results with subpar growth coming from its two main business segments. This cloud growth seems benign when we compare to its top competitors in the cloud space,” said Daniel Morgan, a portfolio manager at Synovus Trust Co.
The quarterly report caused a 2.5 per cent drop in the stock price of the company with the stocks gaining nearly 25 per cent so far this year as of Thursday.
There were no plans to hire a second CEO after former co-chief Mark Hurd died in October, said company chairman Larry Ellison on a post-earnings call.\
“How is our search going for the new — for a second CEO? We don’t have one. We have no plans for having a second CEO,” Ellison said.
After Ellison decided to step aside to focus on his role as chief technology officer, Hurd and Safra Catz were named co-CEOs in 2014.
Assuming a currency headwind, Oracle expected third-quarter adjusted profit to be between 95 cents and 97 cents per share, the company said, while analysts were expecting 97 cents.
In the second quarter, the total revenue rose to $9.61 billion but, according to IBES data from Refinitiv, was lower than the average estimate of analysts of $9.65 billion.
(Adapted from Reuteers.com)