Oracle profits drop slightly on strong US dollar

Hurt by a strengthening US dollar, Oracle announced earnings Thursday that were slightly below the company's previously issued guidance, and profits that fell slightly.

The company reported GAAP income that fell one percent year-on-year, to US$1.3 billion on $5.6 billion in revenue for its fiscal 2009 second quarter, ended November 30. Revenue was up 6 percent from the company's year-ago tally. Earnings per share of US$0.34 matched analysts' expectations, according to a survey by Thomson Financial.

The strengthening US dollar cost the company about US$0.03 per share in earnings, Oracle said. It had issued guidance in September that it expected US$0.35 or $0.36 per share.

Software licensing revenue was up 8 percent during the quarter, but new software sales were down 3 percent, compared to year-ago numbers.

In a conference call with financial analysts Oracle executives blamed that drop in new software sales on currency fluctuations, which have reduced the value of some international sales, when measured in US dollars.

The company signed its "largest on-demand sales force automation contract this quarter," beating out software-as-a-service rival Salesforce.com, Oracle said in a statement.

In that particular deal, the un-named customer had been using the Salesforce.com product before dropping it for Oracle, said company CEO Larry Ellison. "This quarter was conspicuous in a series of competitive winds against Salesforce.com," he added.

Ellison also hinted that Oracle could keep up its string of software company acquisitions, even if some companies may not want to be purchased at current market valuations, Ellison said. "Some companies have much more attractive evaluations right now, but I'm not sure they'd be wildly enthusiastic about selling for cash," he said. Oracle is looking at a "potential opportunity for large acquisitions if the price is right," he added.

With IT spending estimates for 2009 slashed in recent months, Oracle is under pressure to cut costs. However the company did not announce any layoffs in its earnings release, issued Thursday afternoon.

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