Oracle stock drops more than 5% as segments other than cloud services miss on revenue

For the fiscal third quarter, Oracle reported net income of $1.9 billion, or 68 cents a share, compared with $2.32 billion, or 84 cents a share, a year ago.

Adjusted earnings, which exclude stock-based compensation expenses and other items, were $1.22 a share, compared with $1.13 a share in the year-ago period.

Revenue rose to $12.4 billion from $10.51 billion in the year-ago quarter.

Analysts had estimated earnings of $1.20 a share and revenue of $12.43 billion for the third quarter.

Oracle’s largest segment, cloud services and license support, rose 17% to $8.92 billion. Cloud license and on-premise license revenue was flat at $1.29 billion from a year ago, while hardware revenue rose 2% to $811 million, and services revenue jumped 74% to $1.38 billion.

Analysts had forecast cloud services and license support revenue of $8.83 billion, cloud license and on-premise license revenue of $1.39 billion, hardware revenue of $815.5 million and services revenue of $1.43 billion.

“Since June of last year when we acquired Cerner, that business has increased its healthcare contract base by approximately $5 billion,” said Larry Ellison, Oracle’s chairman, in a statement. “While we are pleased with this early success of the Cerner business, we expect the signing of new healthcare contracts to accelerate over the next few quarters.”

Oracle’s board also hiked the quarterly dividend 25% to 40 cents a share. The dividend will be paid April 24 to shareholders of record as of April 11.

Oracle shares are up 14% over the past 12 months, versus a 14% decline by the iShares Expanded Tech-Software Sector ETF 
IGV,
-2.26%,
 while the S&P 500 index 
SPX,
-1.85%
has dropped 8% and the tech-heavy Nasdaq Composite Index 
COMP,
-2.05%
has fallen 14% in that time.