NEW YORK – It has been a tough week for Oracle CEO Larry Ellison, his America’s cup team is on the verge of losing to New Zealand, and the company he founded delivered a weaker-than-projected outlook for the remainder of the year, warning that it still has to close large corporate deals to remain on course. Basically, admitting that they won’t make this year’s revenue target.
While the weaker than expected revenue numbers was not a major surprise, the extent to which Salesforce.com (NYSE:CRM) and Workday (NYSE:WDAY) have eaten into Oracle’s share of web-based products were. As previously reported, Oracle appears to be well positioned to convert customers to cloud-computing; however, the headwinds technology spending that have resulted in flat to negative sales growth in the last two fiscal quarters do not appear to be fading. According to Josh Olson of Edward Jones & Co., ‘the broad brush with Oracle is you have a challenging IT spending environment and a number of new-product cycles. That’s going to be the story for the next fiscal year: how much momentum they can get for these new products.’
While the shares in the company have gained 1.7 percent year-to-day, the broader markets have gained more than 20 percent, and the recent quarterly announcement will not help share performance. In early trading on Thursday shares of Oracle were down 0.5 percent in heavy trading (35 million shares, compared to the daily average of 16 million shares). The company still has some upside but the quarterly results where a significant setback for Ellison. The smart money is that he will move to reshuffle senior management in an effort to win back the confidence of the market.
Meanwhile, shares in Rite Aid (NYSE:RAD) soared more than 14 percent in early morning trading on Thursday after the company surprised the market with a slight profit in the second quarter. The retailer also raised its full-year earnings guidance based on strong first-half results. Based on the current run rate, same store sales are expected to gain almost a half of percent for the year on the strength of pharmacy sales, which offset a 0.3 percent decline in front-end sales. Shares in Rite Aid have outpaced the market this year gaining more than 200 percent.