Oracle claims it never goes down on you
How do you upvote the headline?
Not much of a surprise though.
Oracle is claiming a $9.3bn haul of revenues, up 4 per cent year-on-year, in its third quarter of fiscal 2014 – but that fell short of Wall Street analyst earnings expectations. The company said that on the quarter it saw GAAP earnings per share of $.56, up 8 per cent and just short of the projected 10 per cent increase. …
... when you can buy shares of a company that spent 7bn to buy an app with no revenues at all?
Really, I can't understand this "market expectations".... "we projected to get 10% more net revenues, we got only 8%, 2.56bn only, sorry" - shares down "we projected to lose 1bn, we lost only 800 millions", shares up... but I hope I'm working for the former company - or it's a customer of mine because I know it will pay salary and invoices.
It's this kind of casino game that is killing economy, analysts don't evaluate company performance really, they place bets. If you're a team coach, you don't mind if betting sites tells you should win by ten points. If you win by eight only, you don't care if those who put bets lost their money, you know your team won and is going forward and play other games - and that's all that is important.
Markets do not operate on absolute inputs. Predicted 1m loss would have been included in share price as soon as prediction is considered robust enough, so another news that the loss was "only" 0.8m is 0.2m relative improvement thus shares going up.
Think about it as if you lent your mate 10 quid (you bought publicly traded shares), then people start talking that he is in deep financial trouble (predicted 1m loss), then you learn that his predicament is actually not so bad (actual loss 0.8m) which improves your chances of recovering part of your money.
I prefer to lend $10 to someone who has a net revenue of $80 instead of the "forecasted" $100 than to someone who told me he's going to lose $100 and lost only $80. I'm sure my chances of recovering all of my money from the former are far larger than the latter.
It's this idea of considering "expectations" instead of actual results that is absurd. And here we're not talking about a company whose revenues are decreasing (maybe steadily), but just didn't grow as expected. Again, that's how the bet world works, but the financial one should stop this insanity. This way it just reward those good at creating and managing expectations - even if they're burning large amounts of money and create no value meanwhile - over those able to create real value just because they have not a working crystal ball. After all, analysts should be fired because they weren't able to predict the correct result as well - why they didn't?
Anyway, read this: http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/
Looks like they read your post - Oracle now trading above yesterday's close, so the 5% fall in after market trading now regained.
Now, i just wish I'd had a $15 million to buy after the fall - looks like someone bought about half a million at the low price, taking a profit now making a cool $700k in 12 hours.
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