Shares in software giant Oracle Corp plunged 9% Thursday on worries that the company would warn of lower-than-expected fourth-quarter earnings which led one prominent investment bank to cut its estimate. As Oracle was set to hold its annual meeting with Wall Street yesterday ahead of its fiscal year end on May 31, there was widespread skepticism about what the company would have to say, leading the shares down $2.3125 to close at $23 on a staggering volume of 57.3 million shares – more than three times the company’s daily average of 17.3 million.
Morgan Stanley Dean Witter analyst Chuck Phillips reduced his fourth-quarter estimate to $0.30 from $0.34 and lowered his target price on Oracle’s stock to $30 from $39. In a show of longer-term support, however, Phillips did maintain his outperform rating on the stock. Phillips is concerned about continued shrinking of the company’s database sales as a percentage of overall revenue and the loss of related software and service sales that would accompany such a dip.
Despite the rampant fears, Oracle insisted it wasn’t planning to make any negative comments about the quarter or lower its guidance to analysts. The current First Call consensus estimate is for earnings of $0.33 per share, down from $0.34 on Wednesday before Phillips’ reduction. The company reported earnings of $0.27 per share in the year-ago period.