NEW YORK: Oracle Corp's shares fell as much as 5.5 percent after the database software maker reported disappointing quarterly earnings late Thursday and said Larry Ellison was stepping aside as chief executive.
Ellison, co-founder and leader of Oracle for 37 years, will be replaced by co-CEOs Safra Catz and Mark Hurd, although Ellison will remain executive chairman and chief technology officer.
Oracle shares were down $1.98 at $39.57 in mid-day trading on the New York Stock Exchange with 7.8 million shares changing hands, more than double the stock's 10-day average volume.
At least three brokerages took negative actions on the stock after news of the management change and weak profit report.
"Database license sales were again negative (especially weak in the U.S.) ... Coupled with Larry Ellison's decision to give up the CEO role, our confidence in the core database business is getting tested," Deutsche Bank analysts said in a research note.
Deutsche downgraded the stock to "hold" and cut its target price to $42 from $48. Barclays Capital cut its price target to $48 from $50, but maintained a "buy" rating.
Cantor Fitzgerald & Co analyst Brian White cut his price target on the stock to $48 from $50, citing "near-term softness".
White, however, said he remained optimistic about Oracle's cloud software efforts. The company's revenue from cloud software rose 29 percent to $477 million in the first quarter, and the company added more than 500 customers.
According to Thomson Reuters data, the median price target for the stock among Wall Street analysts is $46.
Up to Thursday's close, the stock had gained 8.6 percent this year, roughly in line with the broader market. Still, that lags the performance of most tech stocks this year, with the S&P 500's Technology Sector Index <.SPLRCT> rising 14.6 percent by comparison.- Reuters
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