Oracle Issues Profits Warning
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Oracle Corp., the world's second-largest software company, Thursday warned profits for the third quarter -- which ended Wednesday -- would miss Wall Street's expectations by 2 cents per share.
The company cited lackluster U.S. sales of its flagship database software as the reason for the lower-than-expected profits.
"License growth was strong in the first two months of Q3, and our internal sales forecast looked good up until the last few days of the quarter," said Larry Ellison, Oracle's chief executive officer. "However, a substantial number of our customers decided to delay their IT spending based on the economic slowdown in the United States. Sales growth for Oracle products in Europe and Asia Pacific remained strong. The problem is the U.S. economy."
Oracle is now anticipating third quarter profits of 10 cents a share, down from the 12 cents the Street was expecting. The company said current estimates for the quarter show license revenue grew by about 6 percent and total revenue grew by about 9 percent. Applications revenue growth is estimated to have increased by about 50 percent while database revenue growth is estimated to have been flat to slightly negative.
"With continued uncertainty in the economy, we can't predict when sales growth will improve," said Jeffrey O. Henley, chief financial officer. "However, we can predict that Oracle will continue to use our e-business suite software to move all our business processes to the Internet. That in turn will allow us to continue to improve efficiency and keep our overall expenses under tight control.
"These productivity improvements should allow us to continue to deliver year-over-year earnings growth, albeit at a lower rate than previously expected due to lower revenue growth."
Henley said further guidance would be forthcoming during the company's regularly scheduled conference call on March 15.