Oracle's third-quarter profit has fallen to nine cents (six pence)
a share, as some of its key customers continued to rein in their IT
spending.
Net income for the three months ended February. 28 was $508 million
(£357 million) on revenue of $2.2 billion (£1.54 billion), down
from net income of $583 million (£410 million) and revenue of $2.7
billion (£1.9 billion) in the third quarter of 2001, Oracle said in
a statement.
While the economy as a whole has started to recover, technology
spending is still lagging, said Jeff Henley, Oracle's chief
financial officer. Industries where Oracle has, traditionally, done
well, including telecommunication, financial services and high-tech
manufacturing, continued to suffer, reducing sales markedly from a
year earlier. "As far as we can tell, the spending for enterprise
hardware and software remains very soft and does not seem to be
improving," he said.
He added: "Customers aren't doing big deals. They aren't buying
ahead because they don't know if their business is going to grow."
More companies have been opting for the standard edition of
Oracle's database, rather than the enterprise edition, which has
dragged down the company's average selling prices, he said. The
company is optimistic that those customers will upgrade to the
enterprise edition when the economy improves.
Late last year, Oracle had said fourth-quarter 2002 earnings would
be two to three cents higher than in 2001. Fourth-quarter software
licence sales are likely to be down as much as 25% to 30% from 2001
levels, Henley said.
"It's very difficult to understand at this point when the recovery
comes and at what rate the recovery will be at," he said, calling
his fourth-quarter estimate a conservative one.
In the quarter just ended, revenue from new software licences
suffered the most, declining 30% year-on-year to $770 million (£541
million). Software licence renewals grew 5%to $590 million (£414
million). Overall services revenue dropped 7% year on year, to $1.4
billion (£983 million), the company said.
Oracle executives insisted that the company is not losing share in
the database market to rivals such as IBM and Microsoft.
Year-on-year comparisons are particularly tough for Oracle because
it benefited more than most from the telecommunication sector,
Internet start-ups and other industries that have suffered most
heavily in the past year, Henley said.
Earlier this month Oracle warned of a likely earnings shortfall,
citing weak sales in Asia as the reason.