Oracle forecast quarterly profit below analysts' estimates, and said weak sales of its traditional database software licences were made worse by a strong US dollar that lowered the value of foreign revenue.
Shares of Oracle, often seen as a barometer for the technology sector, fell 6% to $42.15 in extended trading after the company's earnings report yesterday. Shares of Microsoft and Salesforce, two of Oracle's closest rivals, were close to unchanged.
"This was an ugly print and speaks to the headwinds Oracle is seeing in the field as their legacy database business is seeing slowing growth," said Daniel Ives, an analyst at FBR Capital Markets. "While cloud has seen pockets of strength, overall the excuses we see out of Oracle have continued to frustrate the Street."
Oracle, like other established tech companies, is looking to move its business to the cloud computing model, essentially providing services remotely via data centres rather than selling installed software.
The 38-year-old company has had some success with the cloud model, but is not moving fast enough to make up for declines in its traditional software sales.
Oracle, along with German rival SAP, has been losing market share in customer relationship management software in recent years to Salesforce.com, which only offers cloud-based services.
Because of lower software sales and the strong dollar, Oracle's net income fell to $2.76 billion, or 62 cents per share, in the fourth quarter ended 31 May, from $3.65 billion, or 80 cents per share, a year earlier.
On an adjusted basis, the company earned 78 cents per share, below the 86 cents expected by Wall Street, according to Thomson Reuters.
Revenue fell 5.4% to $10.71 billion. Revenue rose 3% on a constant currency basis. Analysts had expected revenue of $10.92 billion, on average.
Sales from Oracle's cloud computing software and platform service, an area keenly watched by investors, rose 29% to $416 million.
For the current quarter, Oracle forecast earnings of 56-59 cents per share, below analysts' average estimate of 61 cents. It estimated revenue growth of 5-8% over the year-ago quarter, excluding any change in the value of the dollar.
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