Oracle Profit Forecasts For Q 3, 4: Sluggish Growth Blamed While Currency Woes Predominates

Oracle Corp., The Redwood City, California, US based largest business database software provider, has revealed third and fourth quarter profit forecast, on Wednesday. Safar Catz, Oracle’s co- CEO, has announced the projections. But forecasting has apparently failed to keep pace with the analysts’ expectations that lead to fall in its share prices in the Wall Street.

The software conglomerate has posted a 12% profit drop during the second fiscal quarter. The profit drop figure some how manages to remain lower than Oracle’s earlier predictions and Wall Street expectations. But this time, profit forecast surpasses all expectations, as fiscal year ending comes closer and currency woes start to appear in vicinity.

However, the software giant’s forecast for 6% decline in revenue for the upcoming quarter, remains in line with the analysts’ predictions. But predictions for only 3% growth in net profit stands for lack of confidence among the investors, which has been reflected through fall of share price by 1% during extended trading.

Oracle has got success in beating Wall Street’s profit expectations by three cents while posting $0.63 earning per share during the second quarter. It has merely missed analysts’ predictions on sales revenue target by 0.6 billion while posting a figure for $9.0 billion for the same quarter, reports Forbes Magazine.

However, third quarter profit for around 63-66 cents per share, considering 3% flat sales growth has been forecast. The projection estimates net profit during the third quarter to stand in between $9.33 and $ 9.61 billion, reports Reuters.

Applications developed by Oracle to be installed in customer’s own data centers, has become precedence only. Recently the software developer has stepped forward to attract companies like salesforce.com.inc and Workday Inc. This approach has reduced growth since it has attributed to sell software with online modules over the web, according to a report published in the Wall Street Journal..

Oracle’s approach and concentration towards cloud business has been blamed by the Wall Street investors though the business has got momentum during the last fiscal quarter. Prediction for quicker growth within two quarters, expressed by top executives from the business software developer, has been proved obsolete, since it has posted only 31% growth during the last quarter. The only factor remaining, which is now believed to play the key role in profit forecasting, is concern over strong US Dollar.

The global business software developer has set parameters for foreign currency exchange rate to hurt revenue by 2% decrease and 1% increase. But in reality, exchange rate is slashing the sales revenue by 6% and earning per share eventually decreases by 5 cents. The slashing factor may hurt the earning per share up to 6 cents, as presumed by the analyst who takes stronger currency conversion rate for US Dollar and Oracle’s global sales volume in local currencies, in to account.

The California based software giant’s profit forecast for the third and fourth quarter has failed touch the Wall Street investors and its price has been observed to fall by 1% in extended trading. Rising concerns over stronger Dollar has been considered as the attributed factor in forecasting while many blames for sluggish growth of its cloud business ignoring its growth figure of 31% during the last quarter.