Oracle Says 3rd-Quarter Profit Will Miss Forecasts
Oracle Corp., the No. 2 independent software maker, said Thursday its fiscal third-quarter profit will miss forecasts, its first earnings shortfall in more than three years, because of the weak U.S. economy.
The announcement, made after the markets closed, sent Oracle’s shares down as much as 21% in extended trading. The shares had closed up $2.38 at $21.38 on Nasdaq.
Oracle, whose database software helps store and retrieve libraries of information, said that a preliminary analysis of results for the period ended Wednesday shows it earned 10 cents a share, less than the 12-cent average forecast of analysts polled by First Call/Thomson Financial.
A substantial number of customers cut computer-related spending, with senior executives refusing to sign off on software purchases that had been approved by subordinates, Oracle said.
Most other big technology companies--including Microsoft Corp., Cisco Systems Inc. and Intel Corp.--have already said the cooling U.S. economy is hurting business as corporations curtail purchases.
“There is a general nervousness caused by uncertainty out there that is impacting senior executives across the board,” said Oracle Chief Executive Larry Ellison. The difficulties have yet to spread to Asia and Europe, he said.
The company said it will provide further guidance when it reports final quarterly results March 15.
Sales growth for Oracle’s best-selling program, its database software, was “flat to slightly negative,” the company said. Sales of all software rose about 6%, while total sales, which includes revenue from consulting and other services, rose 9% to about $2.6 billion. Analysts expected sales of $2.89 billion, according to First Call.
Cost-cutting efforts will allow the company to report earnings growth, but at a lower rate than expected, said Chief Financial Officer Jeff Henley. Operating margin for the period widened to 33% from 31% a year ago, the company said.
Redwood City, Calif.-based Oracle is one of the last major technology companies to reduce forecasts because of slowing economic growth. In December, the company said it wasn’t being hurt by the slowdown because corporations were buying its applications software to cut costs and boost efficiency.
