I was waiting, hoping, and dare I say, even anticipating, an earnings beat from the world’s third largest software maker, Oracle (ORCL). Sure, the company’s bottom line EPS of 30 cents did manage to meet the consensus Street estimate. However, the company missed pretty badly when it came to its top line estimate.
Oracle’s total revenue, which includes software sales and the all-important fees charged for maintenance of previous purchases, fell 5% in the first quarter of fiscal 2010 to $5.05 billion. The consensus among most analysts who cover the software space called for revenue of $5.24 billion.
This time, when the Oracle speaketh, Wall Street wasn’t buying it — literally. The shares were down in Wednesday trade even before the earnings release, and in after hours trading, ORCL shares gapped down nearly 5%.
Now I must admit that the failure of Oracle to do a little better than they did comes as somewhat of a surprise to me. I say somewhat here, because while we are seeing an improvement in overall corporate software purchasing, we definitely aren’t seeing an all-out orgy of recovery in the space.
According to the latest ChangeWave Alliance Research Network data on corporate software spending, we are seeing an uptick in software spending for the next 90 days. But that uptick is not as pronounced as the rate of improvement we witnessed in our April measure.
The good news is that for the third software spending survey in a row, we’re witnessing an improvement. And for the first time in more than a year, some software categories are experiencing an actual increase in spending going forward.
It was because of this improving climate that I thought Oracle would do a little better in terms of revenue, but perhaps it’s going to take a little more time before corporate software buyers return in droves to Oracle.
If you are long Oracle shares here, you may want to take some money off the table and bank gains. The stock’s had a nice of late, but that run could be out of steam. If you are looking to put new money to work in the stock, I would wait and see where the shares finally find their near-term support levels. Better yet, you can stay away from Oracle altogether and allocate your money to better tech bets such as Apple (AAPL) and Dell (DELL).
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