Amid Mounting Cloud Competition, Oracle Earnings Miss

Just a week after revealing the company’s plans to acquire Nimbula, a private cloud infrastructure management software startup, Oracle’s (News - Alert) latest earnings report has come in under Wall Street expectations.

Fiscal 2013 Q3 total revenue was down 1 percent to $9 billion, and new software licenses and cloud software subscriptions revenue was down 2 percent to $2.3 billion, officials said during the company’s March 20 earnings call. Oracle shares fell nearly 8 percent in after-hours trading following the announcement, The Associated Press (News - Alert) reported.

Oracle largely blamed currency fluctuations, and said a stronger U.S. dollar damaged third quarter revenue.

“Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle’s reported Q3 GAAP earnings per share would have been $0.01 higher at $0.53,” Oracle said in a statement. “Total revenues also would have been 1 percent higher and new software licenses and cloud software subscription revenues would have been 2 percent higher than reported.”

In the past three years, the Redwood Shores, Calif.-based company has steadily increased its investments in cloud, but has little to show for it thus far. Oracle is competing with bigger players like SAP AG and Microsoft (News - Alert), as well as a growing number of startups for share of the cloud software market, as customers replace aging software and servers with updated, Web-based products.

Yet Oracle President Mark Hurd (News - Alert) said the company’s Software-as-a-Service (SaaS) revenue grew in the last quarter and is banking on its cloud service acquisitions to pay off.

“The Oracle Cloud is the most robust and comprehensive cloud platform available with services at the infrastructure (IaaS), platform (PaaS) and application (SaaS (News - Alert)) level,” Hurd said. “In Q3, our SaaS revenue alone grew well over 100 percent as lots of new customers adopted our sales, service, marketing and human capital management applications in the cloud.”

In other Q3 earnings, Oracle software license updates and product support revenue was up 7 percent to $4.3 billion, and hardware systems products revenue hit $671 million.

Oracle’s acquisition of Nimbula is expected to close in the first half of 2013. Financial details of the transaction have not been disclosed.

Nimbula’s technology is designed to help companies manage infrastructure resources to deliver service, quality and availability, as well as workloads in private and hybrid cloud environments. The Mountain View, Calif.-based company was founded by the team that developed Amazon’s EC2 public cloud service.