Oracle is launching a new bond offering, even as it warns investors that COVID-19 could have an impact on its 'largest revenue quarter'

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Oracle is launching a new bond offering, even as it warns investors that COVID-19 could have an impact on its 'largest revenue quarter'
Oracle Safra Catz
  • Oracle said it is monitoring the impact of the coronavirus crisis which the tech giant could have an impact on its "largest revenue quarter."
  • Oracle shared the insight in a filing with the US Securities and Exchange Commission, a preliminary prospectus supplement for a new bond offering which is expected to be completed this week.
  • The company said the impact of the crisis remains unclear but the pandemic and the lockdown in key areas of the world could affect its May quarter "which is historically our largest revenue quarter of our fiscal year."
  • Click here for more BI Prime stories.

Oracle said the coronavirus crisis could hit its "largest revenue quarter," although the full impact of the pandemic on its business is unknown.

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Oracle shared the insight in a Monday filing with the US Securities and Exchange Commission, a preliminary prospectus supplement for a new bond offering which is expected to be completed this week.

Valoir analyst Rebecca Wettemann said Oracle appears to be taking advantage of "some loosening in the market."

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"In times of uncertainty liquidity is a good thing," Wettemann told Business Insider. "While I wouldn't rule out cash for an acquisition, Oracle needs to keep paying dividends to keep investors happy. They also need to be able to execute on their recently-announced stock buyback."

Oracle's fiscal fourth quarter, which began in March, is typically the tech giant's stronger quarter when it records a big chunk of its revenue. The company reported results for its fiscal third quarter three weeks ago when CEO Safra Catz said the impact of the crisis was unknown and that Oracle was "largely conducting business as usual."

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The company reaffirmed that assessment in the filing, but also acknowledged that the crisis, including the lockdown in many parts of the world, could have an impact on the quarter "which is historically our largest revenue quarter of our fiscal year."

Oracle said the disruptions could have an impact on key software and hardware products "that we generally recognize as revenues upon delivery to customers."

Many enterprise tech companies are expected to have a hard time signing up new customers and closing deals, which typically involve in-person meetings, because of the lockdown in many key markets. The overall uncertainty in the global economy is also expected to lead to a drop in demand.

UBS analyst Jennifer Swanson Lowe had also also recently warned in a note to clients that the coronavirus crisis "adds uncertainty to the company's ability to close large license deals in its typically-strongest May quarter."

Oracle is a major player in the market for enterprise tech used to set up private data centers. But the company has been struggling to establish a stronger presence in the cloud, which lets businesses set up networks on web-based platforms, allowing them to scale down or abandon private data centers.

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Oracle said it plans to use proceeds from the offering for "general corporate purposes," including stock buybacks, repaying debt and "future acquisitions."

Another technology giant, Intel, recently also disclosed that it was looking to raise $8 billion in a bond offering to take advantage of historically low borrowing costs.

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