(By
Jason Simpkins ) Despite earlier this week announcing disappointing first-quarter results, Oracle Corp. (Nasdaq:
ORCL)
says it expects its second quarter will be stronger. However, many
analysts are skeptical, as the company's attempted takeover of Sun
Microsystems Inc. (Nasdaq:
JAVA) has not gone as smoothly as planned.
Oracle reported revenue for the three months ended Aug. 31 fell 5%,
to $5.05 billion. Analysts were expecting $5.2 billion of sales.
Net income rose 4% to $1.1 billion, or 22 cents a share, by
Generally Accepted Accounting Principles (GAAP), but the company leaned
heavily on support contracts and cost cutting to maintain
profitability. The world's second-largest software maker blamed the
drop on declining overseas sales and a stronger U.S. dollar.
"Oracle's results were impacted by the reduced value of foreign currencies
when compared to U.S. dollars, reducing Q1 GAAP earnings by $0.02 per
share," the company said. "Without this impact, Oracle's Q1 GAAP and
non-GAAP earnings per share would have been $0.24 and $0.32,
respectively."
Oracle issued a more positive outlook for its fiscal second quarter,
which ends in November. The summer is traditionally a slow period for
the company which typically sees business pick up as its fiscal year
moves forward. Additionally, the global economy is showing signs of
improvement.
Oracle President Safra Catz said profit would be 35 cents to 36
cents per share in the second quarter. The company forecast revenue of
about $5.6 billion to $5.8 billion for the period.
However, analysts remain skeptical that a fledgling economic recovery will necessarily lead to an increase in earnings.
"Just because people are starting to feel better about the economy doesn't mean they're ready to spend money on software," said Partrick Walravens, an analyst at JMP Securities Inc. (NYSE: JMP), told BusinessWeek.
Sales of new software licenses – a key indicator of future revenue –
fell 17% to $1.03 billion. Sales of database and middleware licenses
plunged 21.5%.
