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Oracle cloud revenues soar in mixed third-quarter report

Oracle's ongoing reinvention was reinforced by a strong cloud performance in a third-quarter report Tuesday, amid mixed overall results.

Over the past few years the Redwood City business software giant has rewritten its applications for the cloud, and is adding a cloud center on a 27-acre site in Austin, Texas.

"Our cloud business is now in hyper-growth phase," said Oracle co-CEO Safra Catz, saying the report reflects "a fantastic quarter."

The company reported total revenue of $9 billion and earnings per share of 64 cents, including some one-time expenses. Analysts polled by Thomson Reuters had expected revenue of $9.12 billion and earnings of 62 cents per share. Fully reported earnings of 50 cents per share met analysts' estimates.

Oracle headquarters in Redwood City, Calif., Wednesday, May 14, 2015. (Patrick Tehan/Bay Area News Group)Oracle headquarters in Redwood City, Calif., Wednesday, May 14, 2015. (Patrick Tehan/Bay Area News Group) (Patrick Tehan)

Oracle's board declared a 15-cent-per-share dividend and authorized a $10 billion share buyback.

The company blamed the strengthening U.S. dollar for putting a crimp on sales. Revenue was down 3 percent from the same quarter last year, and profit was down 14 percent.

As one of several legacy Silicon Valley giants shifting to the cloud, Oracle's strategy seemed born out by a strong report on cloud sales.

Total cloud revenues were $735 million, up 40 percent, while total on-premise software revenue declined 4 percent to $6.3 billion. Those numbers show that on-premise revenue from software purchased and used at customers' locations is still the heart of a company shifting to meet the migration to the cloud.

Service revenues sagged 7 percent to $793 million.

"Had the dollar not strengthened," earnings per share would have been 4 percent higher, Catz said in a conference call with analysts. "Assuming no more wild currency swings, this fiscal year will turn out to have been the trough year for operating income," she said.

Co-CEO Mark Hurd said that Oracle added nearly a thousand new software-as-a-service customers during the quarter, with some snatched from competitor Workday.

Larry Ellison, Oracle's founder and chairman, said that while Oracle still does "an awful lot" of database software that is bought and used by customers at their businesses, business are moving it to the cloud. "We see the next generation of our database business predominantly in the cloud," he said.

Oracle shares closed up slightly at $38.74, but rose nearly 4 percent in after-hours trading to $40.20 a share

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Author: Red

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