Slow sales blight Oracle?s shares

Database vendor?s shares take a dive following analysts? concern over declining licence sales

Oracle?s shares dropped more than $3 to $36 in after-hours trading last week, after the database giant reported first quarter figures below analysts? expectations.

Although turnover increased 30 per cent to $1.37 billion for the quarter ended 31 August, analysts had expected revenues of $1.4 billion. But they were even more concerned about the fall-off in sales of database licences.

Licence revenue grew only six per cent compared with the same period last year, although analysts had expected growth of 20 per cent, partly on the back of the recent launch of Oracle 8.

Oracle CEO Ray Lane admitted that the company had noticed a general slowdown in the database market over the past year and he expected the trend to continue.

He told analysts that the slow ramp-up of Oracle 8 was expected, although he predicted database sales growth would rebound to between 25 and 30 per cent by the end of the fiscal year.

Other reasons cited for the decline included a particularly robust quarter a year ago, which made comparisons look worse than they really were; internal disruption following the firm?s reorganisation during the quarter; and currency fluctuations worldwide.

Oracle also reported net income that fell to $40.5 million from $112.8 million, after $167.1 million in acquisition costs relating to the purchase of software house Treasury Services and the merger of its Network Computer affiliate with Netscape?s Navio subsidiary. Earnings, however, were in line with analysts? expectations.

Sales in Europe still languished below those of other regions at 20 per cent growth, or 33 per cent in local currencies, compared with 36 per cent in the Americas. Asia-Pacific also grew by 32 per cent.

Application sales grew by an outstanding 96 per cent ? above analysts? expectations of 75 per cent ? while Oracle Services grew by 42 per cent compared with the same period last year.