Oracle shares tumble as cloud outlook darkens

Oracle on Thursday forecast current-quarter cloud revenue growth that missed Street expectations after reporting disappointing second-quarter sales in the same business, sending its shares down nearly 7 percent after hours.

The company has seen its shares rise nearly 30 percent this year as investors bet that its efforts to switch to the cloud would pay off.

Oracle said growth in its cloud-computing business would slow to 21 percent to 25 percent in the third quarter, down from the 44 percent growth in the preceding quarter. The forecast was also below analysts' estimates.

The company's current-quarter profit expectations also came in below analysts' estimates.

Oracle, which inked cloud deals with AT&T and Bank of America this year, is a late entrant to the cloud-based business and has been stepping up efforts to catch up with rivals such as Amazon.com, Microsoft and Salesforce.com.

"Oracle has largely made the transition on SaaS but still have a lot of work ahead on transitioning the database business to the cloud," said Wedbush analyst Steve Koenig.

In October, the company launched its machine learning-based autonomous database cloud to better compete against market leader Amazon Web Services (AWS).

"Investors were expecting more...Microsoft and Amazon are in a two-horse race that is well above any other competitor and everyone else is chasing them, including Oracle," said Daniel Ives of research firm GBH Insights.

Amazon posted a 42 percent rise in cloud sales to $4.58 billion in the quarter to September, while revenue in Microsoft's Azure services surged 90 percent during the same period.

Oracle forecast current-quarter adjusted profit between 68 cents and 70 cents per share, compared with analysts' expectations of 72 cents, according to Thomson Reuters I/B/E/S.

Oracle, which increased its share buyback program by $12 billion, said net income rose to $2.23 billion, or 52 cents per share, in the second quarter ended Nov. 30, from $2.03 billion, or 48 cents per share, a year earlier.

Total adjusted revenue rose 6.2 percent to $9.63 billion, beating expectations of $9.57 billion, according to Thomson Reuters I/B/E/S.

Revenue in Oracle's traditional software licensing business, by far still its largest, rose 3 percent to $6.31 billion.

On an adjusted basis, Oracle earned 70 cents per share, topping analysts' estimate of a profit of 68 cents.

(Reporting by Sonam Rai in Bengaluru and Salvador Rodriguez in x; Editing by Sriraj Kalluvila)