Oracle posts profits warning as US spending slides

A wave of delays in IT investment by US-based companies has forced Oracle to issue a profits warning.

A wave of delays in IT investment by US-based companies has forced Oracle to issue a profits warning.

In his announcement, Oracle chief executive Larry Ellison blamed the delays on customer anxiety over the downturn in the US economy.

"A substantial number of our customers decided to delay their IT spending based on the economic slowdown in the United States. Sales growth for Oracle products in Europe and Asia Pacific remained strong. The problem is the US economy," Ellison said.

In Oracle's estimates for the three months to the end of February, database revenue growth was "flat to slightly negative" while total operating margins grew 33%, up 2% from last year. License revenue increased 6% and applications revenue growth was estimated at 50%.

Oracle is the latest company in the technology sector to issue an earnings warning. Gateway and 3Com have already released worse-than-expected results while forecasts have been downgraded at Apple, Dell and Sun Microsystems.

In a conference call with analysts, Ellison said Oracle's sales were strong in December and January. It was only in the last few days of February that many companies delayed purchases.

"It's disappointing. A bunch of deals were approved at the vice president and senior vice president level, but once it got to the CFO and CEO level, they were pushed off. We have a lot of nervous senior executives looking at this economy and being very cautious. They wanted to wait 30 to 60 days to get a read on the economy," he said.

Oracle CFO Jeffrey O. Henley admitted the company would need to rein in expenses over the coming months, mainly through moving its own business processes online.

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