Oracle Falls After Database Revenue Misses Estimates (Update4)

Sept. 17 (Bloomberg) -- Oracle Corp., the world’s second- largest software maker, fell 2.8 percent in Nasdaq trading after first-quarter sales missed analysts’ estimates, hurt by slowing demand for databases.

Sales of database and so-called middleware programs plunged 22 percent to $711 million in the period ended Aug. 31, Redwood City, California-based Oracle said yesterday. That compares with the $826 million estimate of Patrick Walravens, an analyst with JMP Securities Inc. in San Francisco.

“The results show that people may be feeling better about the economy, but that doesn’t mean they’re ready to part with their money,” Walravens said in an interview. He has a “market perform” rating on Oracle shares and said he doesn’t own them.

Chief Executive Officer Larry Ellison, 65, faced slower orders overseas, especially in Europe and Asia. With fewer companies buying software, Oracle has had to rely on support contracts and cost cutting to shore up profit. The company also faces a delay in closing its purchase of Sun Microsystems Inc.

Including revenue from acquired companies, total sales dropped 6.6 percent to $5.06 billion, missing the $5.25 billion estimated by analysts in a Bloomberg survey. Profit, minus stock-option compensation and other costs, was 30 cents a share, matching analysts’ estimates.

Oracle lost 61 cents to $21.52 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 21 percent this year.

Profit Forecast

In the second quarter, profit will be 35 cents to 36 cents a share, excluding some costs, President Safra Catz said yesterday on a conference call. Analysts had estimated 36 cents for the period.

Oracle forecast revenue of about $5.6 billion to $5.8 billion, compared with analysts’ projections for $5.74 billion.

“Trust me, no one is sticking their neck out on the forecast in any region right now,” Oracle President Charles Phillips told analysts yesterday.

Total new license sales, including Oracle’s business- management applications, declined 17 percent to $1.03 billion in the first quarter. Software license revenue indicates future growth, when customers later sign annual support contracts.

“You want to start to see revenue get better,” said Heather Bellini, an analyst with ISI Group in New York. “There’s only so much you can do with cost cutting. People want to see companies grow again.”

To propel growth, Oracle has acquired 53 companies in the past four years, including the $10.3 billion takeover of PeopleSoft Inc. The buying spree helped Oracle more than double sales to $23.5 billion in the year ended in May.

Sun Acquisition

The company announced plans to buy Sun for $7.4 billion in April, an effort to expand further beyond database software. This month, the European Commission opened an in-depth investigation to assess whether the purchase would hurt competition.

“The real wild card will be when Sun closes,” said David Rudow, a Minneapolis-based analyst with Thrivent Asset Management, who helps manage about 4 million Oracle shares. “Every day Sun doesn’t close, they are losing business.”

To contact the reporter on this story: Rochelle Garner in San Francisco at rgarner4@bloomberg.net