Oracle meets muted expectations in first quarter

Reuters
The company logo is shown at the headquarters of Oracle Corporation in Redwood City, California in this February 2, 2010 file photograph. REUTERS/Robert Galbraith/Files

SAN FRANCISCO (Reuters) - Oracle Corp said quarterly software sales and subscriptions grew in line with tempered forecasts, ending two straight quarters of misses and supporting expectations that enterprise tech spending may be on the mend. The 36-year-old tech company has been hurt by weak enterprise tech spending and is also trying to fend off increasingly aggressive rivals focused on providing software over the cloud or Internet, like Workday and Salesforce.com. "This gives investors something to hang their hat on going forward, that the Oracle growth story has hit a number of painful speed bumps but maybe execution and a slightly better spending environment are starting to pay off," said FBR analyst Daniel Ives. Oracle said on Wednesday new software sales and Internet-based software subscriptions rose 4 percent to $1.7 billion in its fiscal first quarter which ended in August, in line with its own forecasts. Analysts on average had expected about $1.63 billion, Ives said. The world's No. 3 software maker had forecast that new software sales and subscriptions would be unchanged or rise as much as 8 percent in the first quarter. Investors scrutinize new software sales because they generate high-margin, long-term maintenance contracts and are an important indicator of future profit. Oracle said overall revenue rose 2 percent to $8.37 billion in the first quarter. That was a little below the $8.479 billion analysts had expected on average, according to Thomson Reuters I/B/E/S. Net profit rose to $2.19 billion, or 47 cents per share, compared to $2.03 billion, or 41 cents per share, in the year-ago quarter. On an adjusted basis, Oracle earned 59 cents per share. Analysts expected first-quarter EPS of 56 cents, down from an average estimate of 58 cents two months ago. Revenue from Oracle's hardware division, which it acquired through the $5.6 billion purchase of Sun Microsystems in 2010, fell 14 percent to $669 million. Oracle had forecast that hardware product revenue for the August quarter would decline as much as 6 percent or grow as much as 2 percent. Shares of Oracle rose 2.5 percent in extended trade after closing up 1.83 percent at $33.87. (Reporting by Noel Randewich; Editing by Richard Chang)