NetSuite's Revenue Growth Lags

NetSuite Inc., whose $9.3 billion deal to be acquired by Oracle Corp. hangs in the balance, on Friday reported disappointing revenue growth in the third quarter and warned that it doesn't expect to meet its revenue target for the year.

Oracle earlier this month threatened to scrap the acquisition if the majority of NetSuite's shareholders didn't back the deal. Concerns by NetSuite's largest institutional shareholder, T. Rowe Price Group Inc., that Oracle's offer of $109 a share undervalued the company, are apparently derailing the deal.

Oracle extended the deadline to complete the deal to Nov. 4, which it said would be its final extension.

Oracle wants to buy NetSuite to bolster its cloud-software offerings, a market segment where Oracle widely has been perceived as a laggard and is racing to add new services.

Total revenue at NetSuite rose 26% in the third quarter, as recurring revenue from subscription and support climbed 23%. Nonrecurring revenue, such as from professional services, jumped 41%.

Still, NetSuite's total revenue of $243.9 million fell below the $249.9 million expected by analysts. In addition, the company said it didn't expect to achieve its revenue forecast of $955 million to $975 million for the year and was withdrew all of its previous guidance for 2016.

For the third quarter, NetSuite posted a loss of $34.1 million, or 42 cents a share, compared with a year-ago loss of $37.3 million, or 47 cents a share. Excluding items, the company earned 20 cents a share. The average analyst estimate of 12 cents a share on Thomson Reuters.

NetSuite shares, which are down 8% month-to-date, edged up 0.4% to $102 in morning trading Friday. Meanwhile, Oracle stock fell 0.7% to $37.83.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

October 21, 2016 11:45 ET (15:45 GMT)

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