By Dhirendra Tripathi
Investing.com – Oracle Corporation (NYSE:ORCL) stock traded sideways in premarket Friday as traders were split between its strong fourth quarter outlook and earnings miss in the third.
The stock was down 0.7% initially but was just about in the green later.
Heavy spending to develop cloud capabilities and services had the company trail third quarter earnings estimates.
Cloud services and license support costs rose 23% during the quarter, while total operating expenses were up 8% at $6.69 billion.
Oracle Chief Executive Officer Safra Catz said earnings were hit by "share price declines of equity investments, impacted by the widespread downturn in equity markets last quarter."
Catz was referring to Oracle’s investments in gene sequencing company Oxford Nanopore (LON:ONT) and ARM server chipmaker Ampere.
The company is targeting healthcare as a key focus area to embed its services in. In December, it also agreed to acquire health information technology vendor Cerner (NASDAQ:CERN) for over $28 billion.
Late in embracing cloud, Oracle will incur a capital expenditure of $4 billion this year to take on the likes of Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Alphabet (NASDAQ:GOOGL).
Sales of Fusion and NetSuite – Oracle’s two enterprise resource planning products – rose 33% and 27% respectively – slower than in the previous quarter as the company attempts to transition more clients to cloud, and away from on-premise management.
Cloud revenue for the quarter ended February 28 rose 24% to $2.8 billion. The business had booked $2.7 billion in revenue in the second quarter.
Total revenue rose 4.2% to $10.5 billion and match analysts’ estimates. Adjusted profit per share fell 3 cents to $1.13.
The company expects current quarter adjusted profit to be $1.40-$1.44 per share, ahead of estimates. It forecast revenue to grow 6-8% on a constant currency basis.