Oracle's Q3 profit meets lowered estimates

Two weeks after warning that its financial results would be lower than expected, Oracle. on Thursday reported a profit for its third fiscal quarter that was in line with analysts' revised predictions. The company announced that third-quarter income increased 16 percent to US$583 million, or $0.10 a share, up from $503 million, or $0.08 a share, a year ago. Analysts had expected a profit of $0.10 a share, after lowering their previous estimate of $0.12 a share, according to First Call/Thomson Financial.

Revenue for the quarter was $2.7 billion, up from $2.4 billion a year ago, Oracle said.

Joining a long list of IT vendors hurt by the economic slowdown, Oracle announced March 1 that its results would be worse than expected. The company predicted that revenue would rise about 9 percent -- less than the 15 percent to 17 percent range analysts had expected, and said earnings would come in at $0.10 per share, $0.02 lower than its original forecast.

While it managed to achieve those revised targets Thursday, sales from the company's applications business were slower than analysts had hoped for. Oracle predicted two weeks ago that applications sales would grow by as much as 50 percent in the quarter; they actually increased by only 25 percent, to $249 million.

Its core database business performed slightly better than expected, however, growing 6 percent to $823 million. Two weeks ago, Oracle predicted that its database sales would be flat or even slightly down from a year ago.

Oracle said revenue from services increased 12 percent from a year ago, to $1.5 billion.

Oracle's shares on the Nasdaq sank 8.6 percent ahead of the results, closing at a new 52-week low of $14.69. The results were announced after US markets closed. In the after hours markets, Oracle's stock h"The US economic downturn over the past several months clearly affected our revenue and profit growth more than we anticipated, due to a sharp downturn in completed transactions in the last few days of the quarter, and the current economic uncertainty continues to limit our visibility going forward,'' Oracle Chief Financial Officer Jeffrey Henley said in the statement.

However, he said, the company is pleased that it achieved 33 percent operating margins in the quarter, a 2 percentage point improvement from a year ago.

"Our ongoing efforts to improve our cost structure over the past two years have positioned us well to weather the current economic storm," he said. "Looking ahead, we plan to tightly adhere to the e-business cost reduction plan already in place, which hopefully will allow us to maintain our improvements in productivity and efficiency despite a difficult environment.''Oracle faces a rash of lawsuits filed in the past week charging securities fraud on behalf of investors who bought Oracle stock. One such lawsuit, filed this week in the US District Court for the Northern District of California, accuses senior executives at Oracle of making false and misleading remarks that inflated the value of Oracle's stock, when in fact they knew Oracle's share price would fall.

Specifically, the complaint charges, the executives maintained throughout January and February that demand remained strong for Oracle's products and that the company was on track to reach its third-quarter financial targets. Contrary to those assurances, Oracle warned on March 1 that both revenue and profit would fall below expectations, and its stock plummeted accordingly.

The lawsuit, filed by Schiffrin & Barroway, LLP, seeks class-action status on behalf of investors who acquired Oracle common stock between Dec. 15, 2000 and March 1. At least five similar lawsuits have been filed against Oracle in the USOracle, in Redwood Shores, California, can be reached at +1-650-506-7000 or at http://www.oracle.com/.

Join the newsletter!

Error: Please check your email address.

More about First CallOracleThomson Financial

Show Comments