Shares of corporate information technology provider Oracle Corp. (NYSE: ORCL – $51.95) are trading significantly lower after hours following its report that quarterly revenue from its cloud business fell short of Wall Street expectations. Total revenues were up 6%, compared to last year to $9.8 billion, but slightly below Street expectations of $9.77 billion. Cloud and On-Premise Software revenues were up 8% to $8.0 billion; Cloud Software as a Service revenues were up 33% to $1.2 billion; and Cloud Platform as a Service plus Infrastructure as a Service revenues were up 28% to $415 million. Total Cloud revenues were up 32% to $1.6 billion. Despite a fourth quarter outlook that exceeds analysts’ forecasts, traders were looking for more out of ORCL punishing the stock by about 7% to start tomorrow’s trading.
High-quality Oracle shares should continue to interest patient investors. Support for the stock has varied over the past several months, but its current valuation, combined with the growth I envision, provides for respectable long-term total returns factoring in the 1.5% dividend yield.