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Oracle skids on sales
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September 15, 1999: 11:19 a.m. ET
Database software firm shares tumble 8 percent amid slower license growth
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NEW YORK (CNNfn) - Shares of Oracle Corp. fell more than 8 percent Wednesday morning after the database software firm reported a slowdown in its first-quarter sales growth.
Although the Redwood Shores, Calif.-based firm met analysts' forecasts for a profit of 16 cents a share, Oracle (ORCL), which reported the results after Tuesday's market close, failed to meet the "whisper number" of 19 cents a share.
Furthermore, although the company's software license revenue grew 9 percent on a year-over-year basis, it was far short of the 22-percent growth Oracle logged in the fourth quarter.
Oracle shares dropped 3-3/4 to 41-11/16 in morning trade. Its stock opened at 40-1/8 and fell as low as 39-7/8 on the Nasdaq stock market.
USB Piper Jaffray cut its rating on Oracle to "buy" from "strong buy."
Oracle officials attributed the slower sales growth figures to typical seasonal factors. Analysts generally agreed, although Art Russell of Edward Jones said Oracle's license revenue growth was nonetheless slower than expected.
"The software license revenue is widely viewed as a healthy barometer of their business," Russell said. "I think most of us were looking for growth in the 12- to 15-percent range, and we got 9 percent."
Another factor looming over Oracle's first quarter performance was its better-than-expected showing in the fourth quarter, which is typically a strong quarter because the company's sales staff is hustling to meet its fiscal year-end quotas.
Russell said Oracle may have pulled some business into the fourth quarter at the expense of the first.
"People had gotten their hopes up that they would blow out the quarter," he said. "But if you look back historically, their numbers are all over the board [from quarter to quarter]. You have to take a rolling 12-month average to look at this business."
Meanwhile, company executives remained optimistic about the remainder of its fiscal year.
"We don't see anything for the rest of this year that looks negative at all," Jeff Henley, Oracle's chief financial officer, told CNNfn. "We think that business is going to be terrific this year."
Russell, who has not changed his "strong buy" rating on Oracle's stock, agreed, noting that a number of large sales that weren't executed by the end of the first quarter are in the books for the second quarter.
"The pipeline of new deals is very strong right now," Russell said. "Fundamentally, their story is still very much intact. They are the dominant provide of database software to corporate America, and they are well positioned as an Internet infrastructure provider."
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