Oracle sees stronger growth in cloud transition


SAN FRANCISCO • Oracle Corp’s shares rose on a strong sales forecast, signalling the world’s second-largest software maker expects greater customer demand in its transition to cloud-based computing.

Revenue will increase 2% to 4% in the current quarter, holding currency exchange rates constant, with higher growth through the second half of the fiscal year, CEO Safra Catz said on Monday in a conference call with analysts.

Adjusted profit is projected at 83 cents a share to 85 cents a share in the fiscal third quarter (3Q). Analysts estimated 84 cents.

Oracle earlier reported fiscal 2Q sales that were in line with analysts’ estimates. Shares increased about 5% in extended trading.

Catz and CEO Mark Hurd have sought to move the information technology company’s 430,000 customers to Internet-based software from programmes housed on their corporate servers, as a way to keep up with the rapid sales growth of Inc’s cloud unit, Inc and others.

Sales were little changed at US$9.56 billion (RM39.96 billion) in the fiscal s2Q. Analysts, on average, had projected US$9.52 billion, according to data compiled by Bloomberg.

Revenue from Oracle’s cloud services and licence support, which includes maintenance fees for its traditional software, grew 2.7% to US$6.64 billion.

Oracle’s new cloud and on-premise licences sales fell 8.5% to US$1.22 billion.

Oracle’s report and predictions helped defuse concern that corporate spending on infrastructure is declining and gave investors hope that the company can return to stronger revenue growth, said Patrick Walravens, an analyst at JMP Securities.

Executive chairman Larry Ellison’s comments on the conference call also provided an explanation of why Oracle’s attempt to turn its database clients into cloud customers hasn’t happened as quickly as some had hoped, Walravens said.

Ellison said Oracle didn’t have good enough computing infrastructure in place until recently to support cloud customers.

“Larry’s brilliant, but our due diligence suggests that there’s more to it than that,” Walravens said. “I think there will be some debate about whether that is a sufficient explanation.”

Oracle shares rose to a high of US$48.18 in extended trading after closing US$45.73. The stock has declined 3.3% this year.