Oracle Earnings: One Positive and One Negative Trend to Monitor Closely

Shares of Oracle (NASDAQ:ORCL) jumped 2.7 percent in after-hours trading thanks to a fiscal second quarter profit of $2.58 billion, or 53 cents a share, compared to a profit of $2.19 billion, or 43 cents per share, from the year-earlier period.

Don’t Miss: Your Cheat Sheet to Oracle Earnings.

“Ellison has been using acquisitions — including RightNow Technologies Inc. and Taleo Corp. this year — to add cloud computing software that customers can access online instead of storing on their own servers. That’s leading to a higher-than-expected profit margin as Oracle fends off smaller rivals such as Salesforce.com Inc. (NYSE:CRM) and Workday Inc. (WDAY), which also offer Web-based business products,” reported Bloomberg.

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The news was not all chipper, reports MarketWatch. The tech giant announced its seventh straight quarter of decreased hardware revenue, totaling $1.3 billion, down 16% from the same quarter last year. Investors must keep an eye on this trend.

CHEAT SHEET Analysis: Are the Higher-Than-Expected Earnings a Catalyst for Oracle Shares?

One of the core components of our CHEAT SHEET Framework focuses on catalysts that will move a company’s stock. In Oracle’s case, the earnings catalyst may have already sparked. Shares jumped significantly after announcing earnings, but news that Oracle is squeezing out competition in the cloud computing market could mean positive gains in the future. Many analysts have Oracle as a BUY and, despite the downward-trending hardware revenue, if they continue to squeeze out the cloud competition there will be nothing but sunshine on the horizon.

Investing Insights: Oracle Earnings are a Gift for Investors.