Oracle (ORCL) is scheduled to report results of its fourth fiscal quarter after the market close on June 19, with a conference call scheduled for 5:00 pm ET. What to watch for:
1. GUIDANCE: Along with its last report, Oracle guided for Q4 adjusted earnings per share in the range of $1.08-$1.12 per share on revenue growth of 1%-3%. At the time, analysts were expecting the company to report Q4 EPS of $1.05 on revenue of $11.15B, but those figures have since changed to $1.07 and $10.95B, respectively. The company's guidance was in constant currency. Oracle added on its quarterly call that it expects revenue growth in fiscal 2020 to be "higher" than in fiscal 2019.
2. MACQUARIE DOWNGRADE: Tuesday, June 18, Macquarie analyst Sarah Hindlian downgraded Oracle to Neutral from Outperform, saying that her checks indicate the closing Q4 "was a struggle," with partners saying they had to rush to discount orders up until the final days. The analyst said that several leading partners saw a softening of the pipeline and sh believes "there is a step function lower" in demand for Oracle. Hindlian added that while she sees several potential tailwinds for the company in fiscal 2020 - including less marketing spending, improving uptake of Cloud ERP, increased prices on support and adoption of 18c/autonomous DB -- she also believes that outperformance will be capped because of the company's struggles to execute on its strategy.
3. MICROSOFT CLOUD PARTNERSHIP: Earlier this month, Oracle and Microsoft (MSFT) announced a cloud interoperability partnership "enabling customers to migrate and run mission-critical enterprise workloads across Microsoft Azure and Oracle Cloud." According to the companies, enterprises can now connect Azure services to Oracle Cloud services. "Taken together, Azure and Oracle Cloud offer customers a one-stop shop for all the cloud services and applications they need to run their entire business," the companies said in their announcement.
4. LAYOFFS: On March 22, Business Insider reported that Oracle had quietly held a round of layoffs at the time, though the number of cuts was unspecified. Business Insider's Julie Bort said in her report that the cuts happened across the company but also in a segment of Oracle's cloud business. Several days later, Joseph Tsidulko of CRN reported that Oracle would lay off roughly 350 employees in May. Oracle let the State of California in accordance with the WARN Act know that the company was planning to "permanently layoff 255 workers in its Redwood City headquarters, and another 97 in the nearby Santa Clara offices," the CRN story added. Meanwhile, the Financial Times reported about a month ago that Oracle had fired 900 employees from its China division, accounting for 60% of its R&D effort in the region, and some are blaming U.S. and China tensions for the layoffs.
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