Oracle Revenue Misses Analysts Estimates; Shares Fall

Oracle Revenue Misses Analysts Estimates; Shares Fall

March 26 (Bloomberg) -- Oracle Corp., the world's third- largest software maker, reported third-quarter sales that missed analysts' estimates after an acquisition spree failed to spur growth fast enough. The shares fell 8.4 percent.

Net income climbed to $1.34 billion, or 26 cents a share, from $1.03 billion, or 20 cents, a year earlier, Redwood City, California-based Oracle said today in a statement. Sales that include maintenance fees from acquired companies were $5.37 billion in the quarter ending Feb. 29, missing the $5.41 billion average estimate of analysts.

Customers have trimmed their budgets on concern that the economy is slumping. Growth in U.S. information-technology spending this year will slow to 5 percent from 7 percent in 2007, according to a Goldman, Sachs & Co. survey of 100 executives. That's made it harder for Chief Executive Officer Larry Ellison to get a payoff from his $33.5 billion in acquisitions.

``There's no question in my mind that IT budgets will get hit in 2008,'' said Sarah Friar, a San Francisco-based analyst with Goldman Sachs. She advises investors to buy the shares, which she doesn't own.

Excluding stock compensation and acquisition costs, profit advanced to 30 cents, meeting the average estimate of 20 analysts in a Bloomberg survey. Oracle said in December that profit would be 29 cents to 30 cents.

Shares Drop

Oracle fell $1.76 to $19.18 in extended trading after closing at $20.94 on the Nasdaq Stock Market. The shares have declined 7.3 percent this year.

Oracle dominates the market for database programs. It also sells business-management applications for tracking sales, managing billing systems and handling other tasks, and so-called middleware software, which helps different types of programs share information. Oracle trails Walldorf, Germany-based SAP AG in the market for business-management applications, while International Business Machines Corp. leads in middleware.

In total software sales, Oracle ranks behind Microsoft Corp. and IBM.

Oracle won approval last month from the U.S. Justice Department and Federal Trade Commission for its $8.5 billion purchase of BEA Systems Inc. The deal, Oracle's largest since its 2005 acquisition of PeopleSoft Inc., is expected to close by the middle of the year.

With San Jose, California-based BEA, Ellison, 63, gains software that will help it challenge IBM for the middleware lead.

Oracle said in January that the transaction should add as much as 2 cents to per-share profit in the first full year after the takeover is complete.

``Many customers want to wrap together BEA and Oracle products, and they want to know what kind of deals they can get,'' Brendan Barnicle, an analyst with Pacific Crest Securities, said today in an interview with Bloomberg TV. ``Oracle can't offer those deals until the acquisition closes.''

BLOOMBERG