Oracle Surges, Market Stalls

Oracle rode stronger than expected earnings to a 6% gain on Wednesday, but the rest of the market treaded water ahead of Thursday’s Federal Reserve decision on interest rates.

Oracle reported pro forma May quarter earnings of 26 cents a share, beating analysts estimates by 3 cents, on sales of $4.06 billion. New license revenue of $1.26 billion was better than expected, and new applications license sales surged 52%.

Oracle did not break out PeopleSoft results separately, but said they contributed to the strong overall results in the May quarter, Oracle’s fiscal fourth quarter.

Looking forward, the company said it expects fiscal 2006 earnings of 78-81 cents a share on sales of $14.2-$14.4 billion, both ahead of forecasts.

The broader market slipped ahead of Thursday’s Federal Reserve meeting. The Fed is expected to raise short-term rates for the ninth time in a year, but expectations for further rate cuts begin to dwindle after the August meeting.

The Nasdaq slipped 1 to 2068, the S&P gave back 2 to 1199, and the Dow lost 31 to 10,374. Volume declined to 1.7 billion shares on the NYSE, but rose to 1.67 billion on the Nasdaq. Advancers led 18-13 on the NYSE, and 15-14 margin on the Nasdaq. Upside volume was 52% on the NYSE, and 54% on the Nasdaq. New highs-new lows were 202-35 on the NYSE, and 117-33 on the Nasdaq.

After the close, Research In Motion beat estimates but lowered forward guidance. 3Com met estimates, PalmSource missed and warned, and BMC missed estimates but raised guidance. CA disclosed material weaknesses in its financial controls.

During the day, KLA-Tencor lost 3% after it said its $11.50 a share offer for August Tech still holds. August Tech rejected the KLAC offer out of antitrust concerns and accepted a $10.50 a share offer from Rudolph Tech .

Net2Phone surged 25% on a takeover offer from IDT .

Standard Micro soared 24% on its results.

Symbol Tech and Adaptec fell on warnings.