June 19, 2018 / 8:12 PM / in 4 months

Oracle's forecast miss overshadows cloud growth, shares fall

(Reuters) - Oracle Corp’s (ORCL.N) forecast for current-quarter profit missed analysts’ expectations on Tuesday, hurt by a strengthening U.S. dollar, dampening its fourth-quarter earnings beat that was powered by growth in its cloud business.

FILE PHOTO: The sign outside Oracle's offices in Broomfield, Colorado, U.S., March 15, 2017. REUTERS/Rick Wilking/File Photo

Shares of the business software maker, which rose as much as 3.7 percent after the results, fell nearly 5 percent to $44.10 in extended trade after the company’s dismal forecast.

Oracle sees first-quarter adjusted earnings per share to be between 68 cents and 70 cents, below analysts’ average estimate of 72 cents.

“In regard to Q1 guidance, exchange rates have moved from a 3 percent revenue tailwind to now being a 1 percent headwind from the last time I gave guidance,” Oracle’s head of investor relations Ken Bond said on the conference call.

Unlike previous quarters, the company did not give a break up of revenue from its cloud segments, which analysts say could have affected the company’s stock price.

“Oracle’s move to change its reporting structure, which masks the performance of its cloud infrastructure and applications segments, overshadowed the Q4 beat,” Daniel Morgan Senior Portfolio Manager Synovus Trust Company said.

Morgan said all metrics in the fourth quarter were strong, but due to the disclosure change “investors are wondering if Oracle is trying to hide something in its total cloud revenue”.

Oracle, which has cloud deals with AT&T (T.N) and Bank of America (BAC.N), is a late entrant to the cloud business and has been trying to catch up with rivals such as Amazon.com (AMZN.O), Microsoft (MSFT.O) and Salesforce.com (CRM.N).

Oracle Chairman Larry Ellison said some of the company’s largest customers have now begun the process of moving their on-premise Oracle databases to the Oracle Cloud.

AT&T is moving thousands of databases and tens of thousands of terabytes of data into the Oracle Cloud, Ellison said.

Revenue from its cloud services and licenses support rose 8.2 percent to $6.77 billion (£4.7 billion), as more companies shift to cloud computing from the traditional on-premise model to cut costs.

The company’s net income rose to $3.41 billion, or 82 cents per share, in the fourth quarter ended May 31, from $3.23 billion, or 76 cents per share, a year earlier.

Total revenue rose 3.3 percent to $11.25 billion.

Excluding items, the company earned 99 cents per share.

Analysts were expecting a profit of 94 cents per share and a revenue of $11.19 billion, according to Thomson Reuters I/B/E/S.

Reporting by Vibhuti Sharma in Bengaluru; Editing by Shailesh Kuber

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