Oracle shares fell as much as 5.8% in after-hours trading Wednesday after the software giant reported lower-than-expected quarterly sales and said co-CEO Mark Hurd was taking a medical leave of absence.
For the first quarter, Oracle had sales of $9.2 billion, flat from the year-ago period and below analysts’ estimates of $9.29 billion. It earned an adjusted 81 cents per share, which was in line with estimates and up 14% on a year ago.
Revenue from cloud services and license support, which now account for 74% of Oracle’s business, rose 3% to $6.8 billion.
“As our low margin hardware businesses continue to get smaller, while our higher margin cloud business continues to get bigger, we expect Oracle’s operating margins, earnings per share and free cash flow all to grow,” co-CEO Safra Catz said in a news release.
“We’re off to a good start in FY20, and we expect this to be our third consecutive year of double-digit non-GAAP earnings per share growth,” she added.
Oracle shares dropped to $53.00 in Wednesday’s extended session before rallying to $55.72, a drop of 1% from the regular session’s closing price, as the company also disclosed Hurd’s health problems.
“Though we all worked hard together to close the first quarter, I’ve decided that I need to spend time focused on my health,” he said in a message to employees. “At my request, the board of directors has granted me a medical leave of absence.”
Executive Chairman Larry Ellison said he and Catz will cover Hurd’s responsibilities during his absence “with support from the rest of our strong management team.”
Hurd, a former CEO of Hewlett-Packard, was named chief executive of Oracle, alongside Catz, in 2014. In that role, he has overseen sales, marketing, consulting, support, and business units focusing on industries.
On an earnings call, Catz said Oracle now expects second-quarter earnings per share of 87 cents to 89 cents. Analysts had expected earnings of 91 cents a share.
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