-=Oracle (ORCL) reported earnings on Tue 19 June 18 (a/h)

A disappointing outlook and concerns over its developing cloud business sent Oracle (ORCL) shares reeling to a 15-month low Wednesday as Wall Street lowered its expectations for the tech icon.

After it reported fiscal fourth-quarter results late Tuesday, Oracle stock initially rose, then fell on disappointing guidance. The company said fiscal first-quarter revenue should be about $9.4 billion, below Wall Street estimates of roughly $9.5 billion. Shares of Oracle tumbled to 42.82, down 7.5%, on the stock market today, hitting a level not seen since March 2017.

Oracle is undergoing a shift in its product portfolio, away from a traditional model of licensing and maintenance to a subscription-based cloud-computing business while trying to sustain profit margins that have been under pressure.

Analysts, however, were doubtful about its progress. The database software company received price target cuts from RBC Capital Markets, to 52 from 55, and Stifel Nicolaus, to 50 from 53. Meanwhile, Wedbush downgraded Oracle to neutral from outperform.

"Given the strong quarterly results across our software coverage this earnings season, we felt Oracle's call had a less enthusiastic tone given the lack of upside in the cloud, a change in reporting format, lower than expected deferred revenue and a muted outlook," Monness Crespi Hardt analyst Brian White said in a note to clients.


Oracle reported fiscal fourth-quarter revenue of $11.25 billion, up 3% from the year-ago quarter. That slightly beat the consensus estimate of $11.2 billion.

It reported adjusted earnings of 99 cents per share, up 11%. That beat the consensus of 94 cents for the three-month period ended May 31.

The company did say it expects to achieve higher revenue growth rates for its current fiscal year over the comparable year-ago period.

Reporting Changes
During the conference call, Oracle also announced a change to its reporting format. The company will do away with breaking out its various cloud computing segments. Instead, Oracle will combine its various cloud computing sectors into one package, which disappointed some analysts.

"We believe completely ridding of this metric is short sighted," Monness's White wrote. He said Oracle has become more frugal in providing cloud-related metrics.

Credit Suisse analyst Brad Zelnick maintained an outperform rating on Oracle and price target of 60.

"We believe Oracle remains well positioned with underappreciated durability," Zelnick said.