Oracle Meets Expectations For Quarter

The technology bellwether earned $655.9 million, or 12 cents per share, for the three months ended May 31. That was a 23 percent decline from net income of $854.9 million, or 15 cents per share, at the same time last year.

Oracle said its earnings per share in the latest quarter would have been 14 cents per share, if not for a $173.5 million charge to account for the diminished value of its 32 percent stake in another software maker, Liberate Technologies. On that basis, the results exceeded the consensus estimate of 12 cents per share among analysts surveyed by Thomson Financial/First Call.

The pleasant surprise cheered investors who had worried that Oracle's yearlong sales slump would produce an earnings disappointment.

Some of the enthusiasm evaporated, however, after Oracle management projected Tuesday its earnings during the quarter ending in August will be 6 to 7 cents per share, below analysts' consensus estimate of 9 cents per share.

Oracle's shares fell 27 cents to close at $8.93 on the Nasdaq Stock Market before the earnings announcement. After Oracle released its results, the shares surged by as much as 13 percent in extended trading before falling back to a gain of 43 cents, or nearly 5 percent.

The good earnings news during the most recent quarter overshadowed more bad news in Oracle's sales pipeline. The company's new software sales plunged 29 percent from the prior year to $1.17 billion. Oracle's overall revenue in the quarter totaled $2.77 billion, a 16 percent decrease from last year.

Oracle softened the sales blow by pruning expenses, largely by paying fewer bonuses and curtailing corporate travel. The company shaved 28 percent from its sales and marketing costs and shaved another 24 percent from its service delivery costs.

'People have really dug in and found every way they can to save a buck,' Jeff Henley, Oracle's chief financial officer, told analysts during a conference call.

The company didn't make significant layoffs in the last quarter, nor does it plan any immediate job cuts, Henley said, contradicting recent predictions from several analysts.

Oracle had 42,006 employees as of May 31, up slightly from the 41,935 workers on the payroll at the end of the prior quarter. The company's work force is about 3 percent smaller than at its peak during the dot-com boom.

To help keep expenses down, Oracle has hired more workers in India, where pay scales and other operating costs are lower, Henley said. The company expects to continue adding more workers in less expensive countries such as India and China, Henley said.

Oracle isn't planning to hire a new chief operating officer or head of sales to turn around its sagging fortunes, according to Larry Ellison, the company's chief executive officer. Analysts have speculated that Oracle might hire another prominent executive to help compensate for an exodus of top talent in the last two years.

Ellison called that talk 'absolute nonsense.'

The company is operating under the assumption that business spending on technology won't pick up significantly until early 2003. The company expects its new software sales in the quarter ending Aug. 31 to be 15 percent to 25 percent below the total of $731 million recorded in last year's comparable period.

For its full fiscal year ended in May, Oracle earned $2.22 billion, or 39 cents per share, on revenue of $9.67 billion. That was down from a profit of $2.56 billion, or 44 cents per share, on revenue of $10.96 billion in the prior year. It marked the first time in Oracle's 25-year history that annual revenue declined from the prior year.

Copyright

© 2002 The Associated Press. All rights reserved. The information contained

in the AP News report may not be published, broadcast, rewritten or

redistributed without the prior written authority of The Associated

Press.