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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.