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Recent Update on the Software and Semiconductor Industry

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Recent Update on the Software and Semiconductor Industry PART 1 OF 10

Oracle Reappears on Investors’ Radar Screens

Investors’ hopes are rekindled

Oracle’s (ORCL) recent earnings seem to have rekindled investors’ hopes of a successful turnaround. The company is shifting away from its traditional business model of selling one-time software licenses to the model of selling subscription software delivered over the cloud.

The shift to cloud computing provides software vendors like Oracle with a foundation for more predictable and recurring revenue streams. Although Oracle was late to embrace cloud computing, the company has staked its future to cloud computing and is sparing no effort to expand in this sector.

Oracle Reappears on Investors’ Radar Screens

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Earnings surpass expectations

As shown in the chart above, Oracle’s (ORCL) fiscal 4Q171 revenues rose 2.8% year-over-year to $10.9 billion. Analysts on the average were expecting Oracle to report revenues of $10.5 billion for the quarter.

Oracle posted adjusted EPS (earnings per share) of $0.89 in fiscal 4Q17, up from $0.81 in fiscal 4Q16 and above the consensus estimate of $0.78.

Eye on the cloud

Although Oracle (ORCL) has had three revenue misses and one earnings miss over the last 12 months, the company’s Cloud Computing business is a source of optimism. Its fiscal 4Q17 total cloud revenues rose 58% from fiscal 4Q16 to $1.4 billion at a time when traditional software sales have declined ~1.0%.

In the cloud push, Oracle is challenging Salesforce (CRM), Amazon (AMZN), Microsoft (MSFT), IBM (IBM), and Alphabet’s (GOOGL) Google.

  1. fiscal 4Q17 ended May 31, 2017
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