Oracle profit rises 30%, but sales trip up shares

Oracle Corp.’s fiscal third-quarter profit jumped 30%, matching Wall Street’s expectations, but sales fell short of forecasts, sending shares of the business software maker tumbling in after-hours trading Wednesday on fears that the company was being pinched by falling technology spending.

Investors were also disappointed by lower-than-expected guidance for the company’s fourth quarter in a key area of Oracle’s business: sales of new software licenses, which are important because they open the door for Oracle to sell product upgrades and maintenance services to the same clients later.

Oracle’s chief financial officer, Safra Catz, said some customers “got a little more cautious” about their spending during the third quarter, which is part of the reason the company is being cautious in its fiscal fourth-quarter guidance.

Oracle shares fell $1.76, or more than 8.4%, to $19.18 in heavy after-hours trading, when the price swung as low as $19. The shares had fallen 14 cents during regular trading to close at $20.94 before the financial results were reported.

The Redwood Shores, Calif.-based company said it earned $1.34 billion, or 26 cents a share, in the three months ended Feb. 29. That represents a 30% jump from the same period last year, when Oracle’s net income was $1.03 billion, or 20 cents.

Stripping out one-time expenses, Oracle earned 30 cents a share, meeting the average estimate of analysts polled by Thomson Financial.

Sales were 21% higher than a year earlier but lower than analysts had expected. Oracle pulled in $5.35 billion in revenue during the third quarter, far short of analysts’ forecast for $5.42 billion.

Oracle’s software revenue jumped 21% to $4.2 billion in the third quarter, with new software license revenue up 16% to $1.6 billion.

The results signaled to investors that Oracle wasn’t immune to the effects of the sputtering U.S. economy, which has caused some companies to pull back on their technology spending.

Oracle makes database software for businesses and has been on a multibillion-dollar buying binge to broaden its offerings.

Oracle expects net income of 43 cents or 44 cents a share in its fourth quarter, excluding one-time charges, and sales are expected to increase 15% to 19% over the same period last year.