ORCL Oracle Corp

By Jay Greene 

Oracle Corp. is set to report financial results for its fiscal third quarter after the close of trading Monday. Here's what you need to know:

EARNINGS FORECAST: Analysts surveyed by S&P Global Market Intelligence expect Oracle to report adjusted profit of 72 cents a share for the quarter that ended in February, up from 69 cents a year earlier. Net income was 53 cents a share a year ago.

REVENUE FORECAST: Analysts expect Oracle to post adjusted revenue of $9.77 billion, up from $9.27 billion a year earlier. The company reported $9.21 billion in non-adjusted revenue a year ago.

WHAT TO WATCH:

CLOUDY FORECAST: Oracle shares slid in the previous two quarters after the company provided guidance for its cloud-computing business that was below analyst expectations. Three months ago, the company forecast cloud revenue growth of 21% to 25%, not the 30% analysts had expected. "Investor expectations have been reset enough to provide room for a beat this quarter," Barclays analyst Raimo Lenschow wrote in a recent report. He expects cloud revenue at the business software giant to climb 25.4% in the period.

CAPEX WATCH: Oracle announced plans in February to open 12 giant data-center complexes over the next two years, quadrupling the global footprint of its most advanced facilities as it tries to grab a larger slice of the cloud-infrastructure market that Amazon.com Inc. dominates. Those huge data center operations, known as "regions" in industry-speak, can cost hundreds of millions of dollars a piece to build. The expansion has led some analysts to wonder if Oracle's capital spending will climb as a result. Last month, Deutsche Bank analyst Karl Keirstead quadrupled his estimated growth rate for the company's capital spending in fiscal 2019 to 8% from 2% in a research report. Keirstead now expects the business software giant to spend $2.16 billion in fiscal 2019. That would still pale to Oracle's three biggest U.S. cloud-infrastructure rivals -- Amazon, Microsoft Corp. and Alphabet Inc.'s Google -- which reported $41.6 billion combined in capital expenditures and capital-lease deals in the last calendar year. Analysts are likely to look for any signs of significant capital spending growth.

RIVAL REPORTS: Enterprise software companies that have recently reported results have notch gains on strong tech spending from their corporate customers. In a recent report, Sanford C. Bernstein & Co. analyst Mark Moerdler cited comments from Workday Inc., Salesforce.com Inc., and VMware Inc. about improved spending as reason to believe that Oracle will benefit as well, particularly in sales of software that customers run in their own data centers. "As we have already seen for the past two quarters, Oracle had better than expected performance in on-premise license revenue segment, we expect Oracle to continue to post better than expected results for on-premise license revenue," Mr. Moerdler wrote.

(END) Dow Jones Newswires

March 19, 2018 05:44 ET (09:44 GMT)

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