over 3 years ago • 2 mins
Oracle probably saw this one coming: after laying out a foreboding quarterly update for investors, the world’s second-biggest software company’s stock initially fell 5% on Wednesday 📉
Seeing as Oracle’s last quarter ended in May, its results showed the full coronavirus-stained picture. The company fell victim to delayed payments as businesses tried to save themselves money, maybe because they thought Oracle – with its $37 billion bank balance – didn’t need it as much as they did. Throw in nervous customers that might’ve paid for Oracle’s services in better circumstances, and it’s little surprise the company’s revenue and profit came in lower than expected.
And given we’re stuck with those circumstances for a while, Oracle isn’t forecasting its sales will grow at all this quarter versus the same time last year. That’s a far cry from the growth software giants like Amazon’s AWS and Microsoft are expected to turn in – even if it is what Oracle’s investors predicted 🤷♀️
With so many people forced to work from home, cloud-based software companies like Zoom have benefited from an increase in demand. But not everyone's a Zoom: “enterprise software” – which includes Oracle’s specialties of employee management, databases, and resource planning – is expected to take a hit as companies reprioritize their spending. Near term, then, Oracle’s opportunity lies in converting its big software customers into cloud-based software customers, just like Adobe and Salesforce have done.
Next month, we’ll start to hear how most companies have done in the second quarter. Analysts are setting expectations low: they think major US companies’ earnings will be 44% lower than the same time last year. But even that could be generous 😟 Only 48 of those companies have given second-quarter earnings guidance, and almost four times as many have washed their hands of their own previous forecasts. That suggests investors could be in for some big surprises…
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.