Oracle warns on profits and sales

Posted 9:32AM on Sunday 3rd March 2002 ( 22 years ago )

SAN FRANCISCO - Technology bellwether Oracle Corp. warned that its profit and sales during its latest quarter were weaker than anticipated - an indication that recession-weary businesses remain reluctant to invest in computer software and other equipment. The company estimated its earnings for the three-month period ending in February will be 9 cents per share, a penny below the consensus estimate of analysts polled by Thomson Financial/First Call. The projection also represents penny decrease from the company's profit at the same time last year. Oracle, the world's second-largest software maker behind Microsoft, is scheduled to announce the results of its fiscal third quarter on March 14. The shortfall reflected sluggish sales of Oracle's database and business software, particularly in Asia, said CEO Larry Ellison. Without providing specific numbers, Oracle said the year-to-year change in software sales for its third quarter will be similar to the second quarter. Oracle's second-quarter sales of new software licenses fell 27 percent from the previous year. In a conference call with analysts in December, Oracle executives had forecast a decline ``in the high teens'' during the just-completed quarter. Oracle's warning probably will dash hopes for a revival in the depressed high-tech sector. ``This casts a pall over everything,'' said industry analyst George Gilbert of Credit Suisse First Boston. Oracle's shares fell 63 cents to close at $15.99 on the Nasdaq Stock Market. After the company issued its warning, Oracle's shares plunged $1.27, or nearly 8 percent, in after-hours trading. Many other tech stocks also dropped during after-hours trading. Like other tech companies, Oracle is finding it tougher to sell products to cautious businesses that have curbed their spending until they are more certain the economy has recovered. Some analysts believe Oracle's trouble also stems from concerns about the pricing of its database software and the effectiveness of its applications software. ``It feels like most of the tech industry is still in a rut, but Oracle may be in a little deeper hole than everyone else,'' Gilbert said. Ellison believes Oracle's sales will pick up as soon as the economy regains steam. ``As companies become more confident in the economy, we expect that capital spending will increase and our business will improve, first in the U.S. and then around the world,'' he said.

http://accesswdun.com/article/2002/3/198013