Oracle joined a recent procession of technology companies that have
stumbled in a shaky economy, but management's forecast for the next few
months seemed to persuade investors the business software maker will
quickly regain its stride.
The quarterly results announced Thursday
provided the latest indication that companies and government agencies
are clamping down on technology spending until they get a better sense
of where the economy is heading.
The decision-makers in technology
departments have been especially reluctant to invest in new personal
computers and other expensive hardware. That trend has caused leading PC
manufacturers such as Hewlett-Packard. Co. and Dell Inc., and a range
of microprocessor makers to report disappointing numbers and bleak
Oracle's specialty, though, is database software and
applications that automate administrative tasks - products that so far
are still generating higher sales even in uncertain times. That helped
Oracle boost its revenue from new software and online subscriptions by 5
percent from the same time last year, an encouraging sign because those
licenses hatch more moneymaking opportunities in the form of future
upgrades and maintenance fees.
In a particularly heartening sign,
Oracle predicted its sales of software licenses and subscriptions in the
current quarter will climb by 5 percent to 15 percent from the same
time last year.
But Oracle is also trying to muscle its way into
the computer server market, a foray punctuated by its $7.3 billion
acquisition of Sun Microsystems in 2010. The expansion hasn't paid off
yet, although Oracle executives have pledged it will prove to be a
lucrative move. In its most recent quarter, Oracle's hardware revenue
plunged 19 percent from the same time last year.
dragged down Oracle's overall numbers for its fiscal first quarter, a
three-month period spanning from June through August. Like many U.S.
companies that depend on overseas customers for a lot of their sales,
Oracle was hurt by weakened currencies in Europe and other parts of the
world. The currency fluctuations translated into fewer dollars during
the latest quarter compared to a year ago.
Oracle Corp. earned
$2.03 billion, or 41 cents, per share in the quarter. That's an 11
percent increase from net income of $1.84 billion, or 36 cents per
share, at the same time last year.
Excluding certain accounting
items, the company said it would have earned 53 cents per share,
mirroring the average projection of analysts surveyed by FactSet.
Total revenue dipped 2 percent from last year to $8.18 billion. That was more than $200 million below analyst forecasts.
fiscal first quarter is typically sluggish because it falls during the
summer when deals are tougher to close because of vacations.
sales decline in the past quarter might have been more worrisome if not
for Oracle's projection for the current quarter ending in November. The
company, which is based in Redwood Shores, Calif., foresees its revenue
at worst remaining unchanged from last year and perhaps rising by as
much as 4 percent.
Assuming Oracle's results come in at the
mid-point of that forecast, the company's revenue in the current quarter
will be about $9 billion. That's about $200 million under current
Excluding costs for past acquisitions and
stock paid to its employees, Oracle expects its earnings in the current
quarter to range from 59 cents to 63 cents. Analysts forecast 61 cents
Oracle shares initially fell by as much as $1.21 in
extended trading after the fiscal first-quarter numbers came out, but
bounced back as investors digested the numbers and listened to
management's heartening remarks. By late Thursday, Oracle's stock price
had edged up 12 cents to $32.38 in extended trading.