Oracle’s earnings in Q2 disappoint

Sales of subscriptions to cloud computing services up 34 percent

REDWOOD CITY (AP) — Oracle’s latest quarterly profit slipped, but the business software maker made encouraging strides in the increasingly important field of selling subscriptions for applications that can be used on any Internet-connected device.

The company’s progress in online software services, a market broadly known as “cloud computing,” overshadowed the signs of distress that appeared in a financial statement released Wednesday after the stock market closed.

The report didn’t sway Wall Street, which has driven down Oracle’s stock this year amid concerns about the 38-year-old company’s ability to make the transition to a cloud computing movement that cofounder Larry Ellison initially mocked as a passing fancy.

Oracle’s shares dipped 66 cents to $38.25 in extended trading. The stock is down by about 13 percent so far this year.

Oracle earned $2.2 billion, or 51 cents, per share, for its fiscal second quarter ending in November. That represented a 12 percent drop from the same time last year.

If not for certain accounting items, Oracle said it would have earned 63 cents a share. That topped the average estimate of 61 cents per share among analysts surveyed by Zacks Investment Research.

Revenue decreased 6 percent from last year to $9 billion — about $90 million below analyst projections.

The erosion was concentrated in Oracle’s main business of selling software that’s installed on computer hard drives in data centers and machines that are kept on the customers’ premises.

Oracle’s sales of new licenses for on-premise software fell 18 percent to $1.7 billion in the quarter.

The company fared much better in its smaller cloudcomputing division, which is anchored by categories that Oracle dubs “software as a service” and “platform as a service.” Revenue in those categories climbed 34 percent to $484 million during the quarter.

Management predicted the growth rate is going to accelerate and will exceed 50 percent in each of the next two fiscal quarters. The Redwood City, California, company expects to book cloud computing contracts worth more than $1.5 billion in its fiscal year ending in May.

If those forecasts prove accurate, Oracle will close the gap with two smaller rivals, Salesforce.com and Workday, which made early inroads in cloud computing while Ellison was deriding the concept. Ellison, Oracle’s biggest shareholder and one of the world’s wealthiest men, stepped down as the company’s CEO last year, though he remains chief technology officer.

Salesforce.com, which is run by former Oracle executive and Ellison protege Marc Benioff, has been rewarded for its early jump into cloud computing. Its stock has surged by 33 percent so far this year.