On a day where the U.S. stock market tumbled on fears the Federal Reserve’s plan of raising interest rates could be too much to handle, new Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) holding Oracle Corp. (ORCL, Financial) rose in after-market trading on stronger-than-expected earnings for the quarter ending Nov. 30.
The Redwood Shores, California-based company reported net income of $2.3 billion, up 5% from the prior-year quarter. Adjusted earnings of 80 cents per share outperformed the consensus estimate by 2 cents.
Company continues strong momentum in cloud business
Oracle’s cloud service and license revenues were $6.6 billion, while cloud license and on-premise license revenues were $1.2 billion. CEO Mark Hurd said the company’s two cloud ERP businesses, Fusion ERP and NetSuite ERP, “delivered a combined revenue growth rate of 32%” over the prior-year quarter, driven by strong growth in bookings from key customers like MGM Resorts International (MGM, Financial) and Johnson Controls International PLC (JCI, Financial). Hurd and Chief Technology Officer Larry Ellison said on the earnings call that Oracle has a strong ERP customer base, with over 6,000 Fusion ERP customers and 16,000 NetSuite ERP customers. Ellison added the company is increasing its ERP customer base by approximately 1,000 per quarter.
GuruFocus ranks the company’s profitability 7 out of 10 on several positive investing signs, which include consistent revenue growth and operating margins that outperform 97% of global competitors.
Stock rises on otherwise poor day for the U.S. market
Shares of Oracle increased as much as 3% in after-market trading despite closing at $45.73, down 1.87% from last Friday’s close of $46.62 and approximately 2.57% from the September-quarter average price of $48.57, the average share price of Buffett’s 41,404,791-share investment in Oracle.
The Dow closed at 23,592.98, down 507.53 points from the previous close. CNBC columnist Thomas Franck listed several key factors, including an inverting yield curve and “heightened” fears of rising interest rates and an “ambitious” central bank. Buffett’s top technology holding, Apple Inc. (AAPL), closed 0.98% lower, partially contributing to the Nasdaq’s 2.2% decline.
Disclosure: No positions.
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