Earnings Preview: Did Oracle (ORCL) Execution Recover in Q4?

Oracle Corporation (NASDAQ: ORCL) is set to report Q4 earnings after the close of trading on Thursday. Investors are paying close given execution challenge in Q3. Consensus calls for EPS of $0.87 on $11.12 billion in revenue. Guidance was for revenue within a range of -1% to +4% yoy and non-GAAP EPS of $0.85-0.91. The Street sees Q1 EPS of $0.58 on revenue of $8.57 billion. For fiscal 2014, consensus is for EPS of $2.92 on revenue of $39.55 billion.

Commenting, Goldman Sachs analyst Heather Bellini said, "We expect a solid quarter with slight upside as not only do we believe that ORCL benefited from a strong pipeline, but also continued to work through execution challenges that existed in F3Q13. However, given the continued challenging IT spending backdrop coupled with what we expect will be conservative guidance for the company's F1Q14, we are lowering our license forecast for the quarter.. We now model F1Q14 license revenue of $1.71bn or +7% yoy vs. our prior view of +13% ($1.79bn) and consensus of $1.69bn (+6% yoy and -60% qoq) . . .Despite the lowering of our F1Q14 license view, we continue to favor ORCL in large cap software despite its underperformance YTD as we believe execution improvement and consistency of results will translate into non-GAAP EPS upside vs. the Street as FY14 unfolds."

Wedbush analyst Steve Koenig said, "For 4Q, we expect EPS outperformance on cost control and slight revenue upside . . . Despite a challenging demand backdrop, we think the most likely scenario is for a typical sequential uptick on year-end seasonality, coming off a poor 3Q result. Although we see some risks from product transitions (hardware and database), we expect ORCL's strong sales organization to pull off a decent 4Q, as usual. Also, we have heard from integrators this quarter that Fusion applications have stabilized and ORCL is winning more HCM deals."

Goldman Sachs has a Buy rating on Oracle. Wedbush rates the stock Neutral.

For an analyst ratings summary and ratings history on Oracle (NASDAQ: ORCL) click here. For more ratings news on Oracle click here.

Shares of Oracle closed at $34.09 yesterday, with a 52 week range of $27.24-$36.43.

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