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Fri, Dec 20, 2002 - Page 12 News List

Oracle's Q2 profit falls less than the firm had expected

BLOOMBERG , REDWOOD CITY, CALIFORNIA

Oracle Corp's second-quarter profit fell 2.7 percent, less of a decline than forecast, as new database sales at the world's third-biggest software maker rose for the first time in six quarters.

Net income fell to US$534.9 million, or US$0.10 a share, in the quarter ended Nov. 30, from US$549.5 million, or 10 cents, a year earlier, Oracle said in a statement. Sales fell 3 percent to $2.31 billion from US$2.38 billion. The shares rose on the report.

New database sales rose 0.5 percent to US$643.4 million. Profit exceeded the forecast of US$0.08 to US$0.09 a share Oracle gave in September. Oracle's report may signal that companies are starting to buy business software again after a slump that's lasted almost two years, investors said.

"I'm definitely surprised," said Christian Koch, senior technology analyst at Trusco Capital Management, which oversees US$50 billion and sold its Oracle shares earlier this year. "Things are not as bad as Wall Street or the companies perceive."

Sales of license renewals and product support climbed 8.2 percent to US$953.6 million. Sales of new software licenses fell 6.5 percent to US$751.5 million, less of a drop than the 10 percent to 15 percent decline the company forecast in September.

Oracle eliminated 850 jobs in the quarter, or 2 percent of its workforce, more than previously forecast. About 85 percent of the jobs were in consulting, Chief Financial Officer Jeff Henley said on a conference call with reporters. The company will dismiss a "couple hundred" more workers this quarter, he said.

Profit in the third quarter ending in February will be 9 cents to US$0.10 a share, Henley said on a conference call with analysts. Oracle was expected to earn US$0.09, the average estimate of analysts surveyed by Thomson First Call.

Sales will be unchanged to 4 percent higher than last year's third-quarter sales of US$2.25 billion, Henley said.

That translates to sales of as much as US$2.34 billion. Analysts on average expect US$2.32 billion, according to First Call.

"We think we're going to get some real solid top-line growth coming this next quarter, which we haven't had the first two quarters," Chief Executive Larry Ellison said in an interview.

Sales of new software licenses in the third quarter will fall as much as 5 percent or rise as much as 5 percent from the same period last year, when they totaled US$777 million. That translates to a range of US$738.1 million to US$815.8 million.

Oracle shares rose as high as US$11.35 in extended trading after the news was released.

The stock, which has fallen 23 percent this year, fell US$0.39 to US$10.63 as of 4pm New York time in NASDAQ Stock Market trading.

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