US recovery fails to filter through to Oracle

Tech spending uptick will lag, says company

ComputerWire: IT Industry Intelligence

The US economy may be showing sparks of life, but they have yet to re-ignite the market for Oracle Corp's software, the database vendor revealed yesterday.

The Redwood Shores, California-based vendor revealed third quarter results yesterday that showed sales were down 16.6% to $2.2bn. License revenues in the quarter ending February 28 were sharply down at $789.6m, compared to $1.1bn last year.

Operating profits were down 11.3% to $778.7m, and net income was off 12.8% to $508m. Earnings per share came in at $0.09.

CEO Jeff Henley said that while the US economy as a whole may be showing improvement, this had not filtered through to corporate IT spending: "As far as we can tell, tech spending for enterprise hardware and software remains very soft."

As the recovery gathers pace Oracle will still have to wait before it sees the benefit. Henley said that "Recovery in tech spending will lag the overall recovery."

This meant the company was now taking a very conservative outlook for the fourth quarter, and with license revenues down 25% to 30% and earnings per share down one to two cents on last year's $0.15.

Explaining away the slump in third quarter license revenues, Henley insisted the company was not losing market share. He said Oracle had been very successful in markets that were being particularly hit hard, such as dot com, telecoms and IT manufacturing. He added that many companies were choosing to buy the standard edition of Oracle's database rather than the enterprise edition, until they were ready for full scale deployments. Henley also pointed to a particularly weak market in Asia.

Ultimately though, he said, "the biggest issue is large customers don't have the appetite to do big deals.

For the first nine months, sales were down 10.1% to $6.8bn, while net income was off 8.1% to $1.6bn.

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