Tech Check: Oracle (ORCL) and Research in Motion (RIMM) Report Earnings
With the market weak here at home and Europe in a world of worry, tech stocks are also showing vulnerability. Despite expected good earnings reports from Oracle and Research in Motion, these tech stocks closed lower before the bell today along with the broader market.
Here’s what happened after the bell.
Oracle Corp (NASDAQ: ORCL)
Oracle reported $0.60 EPS for the fourth fiscal quarter on about a 40 percent increase in revenues over the year-ago period. The company beat expectations by $0.06. The stock fell a little over 2 percent before the bell, but rallied for a gain of over 4 percent after the bell.
“We continue to take large chunks of market share away from SAP,” said Oracle President, Charles Phillips. “Over the last twelve months Oracle’s applications business has grown 5 percent on a constant dollar basis while SAP’s business has declined 24% over their previous four quarters. This trend has been going on for a long time: Oracle’s applications business has grown 60 percent in the last four years while SAP’s business is 7 percent smaller than it was four years ago.”
The company also credited its recent purchase of Sun Microsystems with boosting earnings, showing over $400 million in added profit from the acquisition.
Comments: Oracle has strong fundamentals and a strong management team. The company reported $0.36 EPS last quarter. Today’s EPS of $0.60 is more than 66 percent improvement over the prior quarter. Equipment upgrades helped the earnings number this quarter, but pent-up demand may be spent for now. The stock looks poised to move higher and is rated a buy. If you can get this one cheap, you will be in for a nice ride.
Research in Motion (NASDAQ: RIMM)
RIMM beat expectations by $0.04 for EPS of $1.38 today. For the year ago period, the company reported $1.12 EPS. Revenues for the current quarter exceeded year-ago period by 23.7 percent, but the number fell short of the market consensus of $4.35 billion, as did subscriptions and shipments.
“RIM achieved significant earnings growth and shipped a record 11.2 million devices during the first quarter, including its 100 millionth BlackBerry smartphone,” said Jim Balsillie, Co-CEO at RIM. “We continue to be focused on growing our business globally and we believe that the range of exciting new BlackBerry products being released in the coming months will create significant opportunities to accelerate RIMM’s growth in the second half of the fiscal year.”
RIMM lost almost 2 percent during trading hours and is down another 4 percent in extended hours trading.
Comments: RIMM is taking it on the chin today, but the fundamentals remain strong. If RIMM can overcome its lower than expected (- $0.01) earnings report last quarter and proves itself a consistent performer over the near-term, the stock could do quite well. In addition, the company is repurchasing up to 31 million common shares. This action plus the relatively high volatility in the stock could mean a well-timed trade could mean a quick profit.
Disclosure: Owns ORCL
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