Strong dollar hurts Oracle earnings

(CNNMoney.com) -- Software vendor Oracle blamed the currency impact of a strengthening U.S. dollar for a decline in its second-quarter earnings, reported Thursday. While sales rose against the year-ago quarter, they came up short of analysts' expectations.

Oracle (ORCL, Fortune 500) reported net income of $1.3 billion or 25 cents per share, down 1% from one year ago. Adjusted for select expenses, the Redwood Shores, Calif. company reported earnings of 34 cents per share, which met analysts' consensus expectation, according to Thomson Financial.

Oracle's sales rose 6% from a year ago to $5.6 billion, below analysts' expectations of $5.84 billion.

Oracle depends on international sales for about half of its revenue.

In a conference call following the earnings report, Chief Financial Officer Jeff Epstein said he expects both non-GAAP and GAAP total revenues to grow 8% to 11% in constant currency and 1% to 4% in today's rates. He expects non-GAAP earnings per share to be 34 cents to 36 cents a share in constant currency and 31 cents to 33 cents a share assuming today's rates.

"We signed our largest on-demand sales force automation contract this quarter," Oracle CEO Larry Ellison said in a statement. "This was just one of several recent wins over Salesforce.com. We also sold our first database machine, launching an all-new and important business for Oracle."

Oracle has acquired 11 companies in 2008 in order to successfully compete with other large players in the software arena including Microsoft (MSFT, Fortune 500), IBM (IBM, Fortune 500) and SAP (SAP).

But the acquisitions haven't given their clients reason to buy. "The selling environment is terrible," said JMP Securities analyst Patrick Walravens, in a client note released before the earnings report.

Walravens also pointed out that weak IT spending could slow sales cycles going forward. Epstein addressed that projection in the call, stating that renewal rates have continued to increased despite the sour economy because customers value the benefits they receive from updates and support.