Disappointing Oracle Results Drive Sell-off of Tech Stocks
Business software developer Oracle Corp released disappointing quarterly results after the closing bell Tuesday, leading to a loss of nearly 12 percent in the company's shares and a domino-effect that dragged down nearly every tech stock on US stock markets. Oracle's earnings miss was a rare occurrence, and seemed to drive home the emerging fear among investors that businesses and the government are poised to make massive cuts in technology spending.
Particularly alarming in Oracle's results was a scant 2 percent growth in new software licenses, viewed across the tech sector as a good indicator of demand from other businesses. The company had expected its software licensing business to expand by as much as 16 percent in previous forecasts. The results had a far-reaching impact as IBM shares were the worst performing on the Dow's, and tech conglomerates such as Cisco, Microsoft, Hewlett-Packard and Intel all saw shares drop significantly.
The 11.66 percent decline in Oracle's shares was their biggest intraday fall in over nine years. The world's second-largest software developer, Oracle posted quarterly earnings of 54 cents per share on revenue of $8.81 billion. Analysts taking part in a recent Bloomberg survey had projected the company would report earnings of 57 cents a share on revenue of $9.23 billion, on average. Oracle shares finished Wednesday's session at $25.77, their lowest level since mid-September, 2010.
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