Oracle Profit Falls On Stronger Dollar; Boosts Dividend 25%

(RTTNews) - Oracle Corp. (ORCL) said Tuesday after the markets closed that its third quarter profit fell 3% from last year, hurt by a stronger U.S. dollar and higher operating expenses.

The company's quarterly earnings per share, excluding items, came in line with analysts' expectations, but its quarterly revenue fell short of analysts' forecast.

The company also raised its quarterly cash dividend by 25% to $0.15 per share. The increased dividend will be paid on April 28 to shareholders of record on April 7.

"We are well on our way to selling over $1 billion of new SaaS and PaaS business in calendar 2015," said Oracle Chairman and CTO Larry Ellison. "Salesforce.com has announced that it also expects to add about $1 billion of new SaaS and PaaS business this year. So it's going to be a close race who sells more in the cloud this year, us or them. Stay tuned."

Oracle shares are currently gaining 2.40% in after hours trading after closing the day's regular trading trading session at $42.87, down 54 cents or 1.24%. The shares trade in a 52-week range of $35.82 to $46.71.

Oracle has adopted an acquisition-led growth strategy. The company has acquired more than 73 companies since 2005. Of late, Oracle has set its eyes on cloud-based software firms.

However, Oracle' revenue growth has slowed down in the last few quarters, raising investor concern about the company's ability to transition from its traditional approach of licensing software to the so call cloud computing method.

Oracle shuffled its top management in September. Company founder Larry Ellison stepped down as CEO after 37 years and became Executive Chairman and Chief Technology Officer. Both Mark Hurd and Safra Catz were promoted to the position of CEO.

Oracle's total software and cloud revenues for the third quarter increased 1% year-over-year to $7.2 billion, with new software licenses revenues down 7% at $2.0 billion. Cloud software-as-a-service and platform-as-a-service surged 30% to $372 million in the third quarter.

Third quarter software license updates and product support revenues grew 2% year-over-year to $4.7 billion. Services revenues for the quarter fell 3% from last year at $858 million.

Hardware systems revenues for the quarter fell 2% to $1.3 billion, with hardware systems products revenue down and hardware systems support revenue both down 2%.

For the third quarter ended February 28, 2015, Redwood Shores, California-based Oracle reported net income of $2.50 billion or $0.56 per share, compared to $2.57 billion or $0.56 per share for the year-ago quarter.

Excluding items, adjusted net income for the third quarter was $3.07 billion or $0.68 per share, compared to $3.11 billion or $0.68 per share in the prior year quarter.

On average, 34 analysts polled by Thomson Reuters expected the company to earn $0.68 per share for the third quarter. Analysts' estimates typically exclude special items.

Total revenue for the third quarter rose to $9.33 billion from $9.31 billion a year ago, while total adjusted revenue for the quarter grew to $9.33 billion from $9.32 billion last year. Thirty-two analysts had a consensus revenue estimate of $9.46 billion for the third quarter.

Without the impact of a stronger U.S. dollar, Oracle said its earnings per share would have been up 9% and total revenues would have been up 6%.