Sales for the quarter fell 7 percent to $5.1 billion, whereas analysts had expected Oracle to record $5.2 billion in sales.
The company’s new license sales fell 17 percent, higher than 4 to 14 percent fall that Oracle had forecast three months ago.
Despite fall in sales, the Redwood City, Calif.-based company posted net income of $1.1 billion or 22 cents per share, up 8 percent from $1.07 billion or 21 cents per share for the same period in the previous fiscal year.
Shares fall
Analysts who had hoped corporate spending, which had plummeted during the economic downturn, is recovering were disappointed with the results.
"Just because people are starting to feel better about the economy doesn't mean they're ready to spend money on software," says Patrick Walravens, an analyst at JMP Securities (JMP).
As a result, company’s share lost as much as $1.08 to $21.05 in extended trading and closed at $22.13 in Nasdaq stock market.
Oracle said that the company has witnessed low sales overseas especially in Asia and Europe. Due to decline in sales, the company has relied on cost cutting measures to boost profits.
Positive forecasts
Despite fall in sales, President Safra Catz said during the conference call that operating margins are expected to rise over the years as the company is recording higher percentage of revenue from its maintenance business.
In the second quarter, Oracle expects that profits will be 35 to 36 cents a share and sales will rise 2 percent.
"We have some very good momentum starting the quarter. We remain very upbeat," Catz said.
Oracle is also confident to seal a deal with Sun Microsystems, a company that Oracle is planning to buy for $7.4 billion dollars.
The deal is being reviewed by the European Union after it launched an anti-trust probe to determine whether the company would gain too much control over the data share market post acquisition.
The takeover would indeed make Oracle a major player in the hardware market dominated by IBM.
Larry Ellison, Oracle's chief executive, said during the conference call that Oracle is "well positioned to compete against IBM".
Warning about the dangers of delaying the deal, Walravens said that "the longer [the closing process] wears on, the more Sun's business deteriorates, and the more market share IBM and Hewlett-Packard take away."
Post new comment