Oracle Drops After Forecast Signals Slowing Growth

Oracle Corp., the world's second- largest software maker, dropped as much as 6.7 percent in European trading after a forecast for the current quarter signaled that growth may slow.

Excluding some costs, profit will be 26 cents to 27 cents a share, the Redwood City, California-based company said yesterday. Analysts had estimated 27 cents, according to a Bloomberg survey. Sales will rise between 18 percent and 20 percent, which would be the slowest growth since 2006.

Chief Executive Officer Larry Ellison, 63, enticed customers last quarter with products obtained in a $33.5 billion acquisition spree. International sales and a rebound in U.S. orders helped the company withstand a slowing economy. Oracle's forecast failed to assure investors that last quarter's surge will continue in the current period.

``What's the catalyst to own the shares for a while? There probably isn't one,'' Sarah Friar, a Goldman, Sachs & Co. analyst in San Francisco, said in an interview. ``The company is taking a more conservative stance, and I think it's the right thing to do right now.''

Oracle dropped as much as $1.51 to the equivalent of $21.04 in German trading from the close of $22.55 on the Nasdaq Stock Market yesterday. They traded at $21.48 as of 12:48 p.m. in Frankfurt. The U.S. shares are little changed this year.

Net income climbed 27 percent to $2.04 billion, or 39 cents a share, in the fourth quarter, Oracle said yesterday. Sales increased to $7.24 billion in the period, which ended May 31.

Topping IBM

For fiscal 2008, Oracle reported $22.6 billion in revenue, vaulting it past International Business Machines Corp. in total software sales for the first time. Microsoft Corp. ranks No. 1.

Excluding acquisition costs and some other expenses, profit rose to 47 cents a share last quarter, topping the average analyst estimate of 44 cents. Including acquired companies, sales advanced to $7.28 billion in the period. That compares with a $6.88 billion average estimate.

Oracle's growth forecast indicates first-quarter sales of $5.42 billion to $5.51 billion.

``We aren't seeing a marked slowdown, but it's extremely early in the quarter,'' President Safra Catz told analysts yesterday on a conference call. ``We won't see significant issues until much, much later if they are there.''

Oracle dominates the market for database programs. It also sells business-management applications for tracking sales, managing billing systems and handling accounting tasks, and provides so-called middleware, which helps different types of programs share information.

Americas Rebound

Sales in the Americas region, dominated by the U.S., climbed 18 percent last quarter. While those sales grew more slowly than overall revenue, they bounced back from a decline in the earlier quarter.

``To see high-teens growth out of the U.S. is a nice rebound from the previous quarter,'' Andy Miedler, an analyst with Edward Jones & Co., said in an interview from St. Louis. ``Longer term, we expect broad-based strength out of all geographies for Oracle.''

Author: Rochelle Garner @ www.bloomberg.com