Important events
Dec 082022
Uncle Sam’s support
A new deal shows the US is increasingly putting its faith in big tech companies for fighting the wars of the future.- Oracle, Google, Amazon and Microsoft have been awarded a cloud computing contract by the Pentagon, the shared value of which could reach up to $9bn. The contract was awarded as part of an effort to prevent the Pentagon from relying too heavily on a single cloud computing provider – which it had previously done with Microsoft.
- It’s especially good news for Oracle as it’s the smallest of the tech companies involved. Many thought the company would not be considered large enough for the contract – pulling in only $900m in cloud computing revenue compared to Amazon’s $20.5bn in Q3 this year. Having been selected, Oracle will join the others in being able to provide services for the Pentagon until 2028.
- Big tech has been battered this year, with Google and Microsoft down by 34% and 27% respectively YTD, and $400bn being drained from the European tech industry this year alone. Aside from that, the EU’s been cracking down on antitrust laws with Amazon, and data protection practices with Meta – so they’re probably enjoying being appreciated for a change.
David B. Gleason/ Wikimedia Commons
Subscribe to Snaps
See the market snapshots that matter and nothing else – sent to your inbox daily. Designed to be read in 20 seconds or less.
Jun 142022
Oracle goes bravely into the green
Software company Oracle is one of the few to be charging into the green on a mostly red Monday, cheered on by a better-than-expected earnings report.- Shares shot up by 14% in extended trading on Monday after hitting a 16-month low in day trading. It comes on the back of a Q4 report that beat on both ends with EPS of $1.54 on revenues that grew 5% from the year before to hit $11.84bn.
- It’s thanks to a “major increase in demand” for its cloud infrastructure business, according to CEO Safra Catz, who says that a high growth in that segment coupled with its new Cerner Corp acquisition will help the brand deliver “stellar revenue growth over the next several quarters”.
- Investors want companies that can generate profitability in this time of economic downturn, and are apparently feeling bullish on Oracle’s ability to do that. That being said, 5% revenue growth this quarter was not huge by tech standards, so investors could also just be feeling hungry for a scrap of good news.
Cerner
Mar 112022
Oracle sees TikTok in its future
Oracle stock boomerangs after hours when the software company slaps a TikTok filter over its earnings miss.🔍 Key points:
- Prices tumbled 7% in extended trading after Oracle released mixed earnings, missing on the bottom line with EPS of $1.13 but bringing in revenues that were in line with estimates and saw growth of 4% to hit $10.51bn.
- Net income was down a whopping 54% to hit $2.32bn on the back of two huge investments this quarter that have yet to bring in returns. Like others in the industry, the balance sheet was also brought down by supply constraints that show no sign of abating this year – on the bright side though, CEO Safra Catz did offer in-line guidance.
- An exciting hint at a TikTok data-storing deal sent prices ticking back into the green. When asked about the deal, Oracle’s chairman laughingly said “we have an excellent relationship with the folks at TikTok”, followed by a Reuters report that the two are nearing a deal – they tried once before last year, but regulatory nuisances got in the way, so investors are hoping second time’s a charm.
Solen Feyissa / Unsplash
Dec 222021
Oracle cracks on with Cerner win
Oracle just agreed to buy healthcare giant Cerna Corp, signalling a major push into the healthcare space. Which, given the whole ongoing Covid thing, kinda makes sense.- The $28.3bn deal is its biggest ever. Cerner shareholders will get $95 per share, representing a 5.8% premium on its Monday closing price of $90.67.
- Cerner stock shot up 21% last week, on expectations of the deal.
- As one of the biggest healthcare IT firms in the US, it will give Oracle access to huge amounts of data with which to develop its AI-based cloud service and attract new healthcare clients.
Louis Reed / Unsplash
Dec 102021
A wise Oracle once told me
Software giant Oracle celebrates its stellar fiscal Q2, despite HP (HPQ) trying to ruin all the fun.- Prices ripped over 11% in after hours trading, having ended Thursday up over 37% for the year so far.
- Revenue of $10.36bn was up 6% (y-o-y) and topped predictions of $10.21, and EPS of $1.21 beat expectations of $1.11.
- Its head is firmly in the Cloud. Revenues for its cloud services lifted 6% to $7.55bn, and it’s opening 14 new global cloud data centers. It took a swipe at AWS to say its Oracle cloud service “never goes down”. Famous last words.
- It swung to a net loss of $1.25bn from a net income of $2.44bn the same time last year, after deciding to settle a ten year lawsuit with HP (HPQ) over former CEO Mark Hurd’s employment.
- HP (HPQ) sued Oracle in 2010 for hiring Hurd after he’d been dismissed for sexual harrassment. Hurd passed away in 2019, so Oracle decided to take the hit and end the fight – if share prices are anything to go by, investors back the decision.
- Guidance was the star at the top of the earnings tree. It’s expecting revenue growth of between 6% and 8%, ahead of the 5% analysts were looking for.
Jun 162021
Low guidance sends Oracle dipping
Oracle releases its latest earnings, and despite a beat on Wall Street targets and some snazzy plans to expand its cloud efforts, prices ended yesterday on a slight decline.The software and tech company released its fiscal fourth quarter earnings, which topped expectations on earnings and sales but failed to impress investors. Oracle reported earnings of $1.54 per share on revenue of $11.23 billion, compared to expectations of $1.31 in earnings per share on $11.04 billion in revenue. The software company’s enterprise applications portfolio is strong, its cloud infrastructure business has seen dramatic increases, and the company saw its most impressive rate of growth in almost a decade.
Guidance-wise, however, the figures didn't blow anyone away – next quarter’s revenue guidance came in lower than people were hoping for as the company plans to increase its expenditure on cloud computing networks. Oracle CEO Safra Catz said investors could expect between $0.94 and $0.98 in adjusted earnings for next quarter, and an increase of between 3% and 5% on revenues. By contrast, analysts were hoping for adjusted earnings of $1.03 per share and a revenue growth of 3%.
Plans to nearly double its cloud capital spending in the next year is behind the soft guidance, but the nearly $4 billion that Oracle expects to shell out on infrastructure may be more than justified when growth is increased and margins are expanded.
Let’s hope the short-term pain leads to some long-term gains.