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Still think Mark Hurd is a wunderkind when it comes to selling hardware? Oracle (Nasdaq: ORCL ) surprised the Street last night when it reported a 6% decline in fourth-quarter hardware revenue. The stock fell sharply as a result.
It's tough to call this sell-off justified after looking at all the Q4 results. Some highlights:
- Total revenue reached $10.78 billion, resulting in $0.75 a share of adjusted earnings. Analysts expected $10.75 billion and $0.71, respectively.
- New software license revenue improved 19% to $3.73 billion.
- Full-year cash from operations soared 29% to $11.2 billion.
And while investors didn't appreciate the decline in hardware system sales, propelled by Exadata and Exalogic system growth, Oracle still managed to generate $1.83 billion in sales when you include maintenance and support. On that basis, the hardware group roughly matched last year's Q4.
So why are investors selling? I guess they'd overestimated the database king's ability to topple server and storage incumbents. Some may have pinned their hopes on a May research report from IDC, which showed Oracle making slight share gains on a double-digit increase in server revenue. Was IDC simply wrong? Too optimistic?
Neither, I'd say. IDC's numbers never intended to represent more than a portion of Oracle's hardware sales -- server-related revenue specifically, inherited via its acquisition of Sun Microsystems. The optimists among us probably hoped that server gains would boost the entire hardware division, putting pressure on Hewlett-Packard (NYSE: HPQ ) , IBM (NYSE: IBM ) , and Dell (Nasdaq: DELL ) as earnings soared. That just didn't happen.
Should investors worry? Should they keep selling? We're asking you. Please vote in the poll below, then leave a comment to tell us what you think about Oracle's earnings report.