Oracle's Up and Down Day

Oracle Tuesday reported revenue growth of 2 percent and earnings growth of 12 percent for the third quarter of 2003, ended February 28, 2003, but that did not stop the stock from taking a 6 percent tumble in after hours trading yesterday. Earnings for the quarter totaled $571 million, or 11 cents a share, up from its year-earlier net profit of $508 million, or nine cents. Total revenue was $2.31 billion, up from $2.25 billion, endding seven straight quarters of year-over-year revenue declines. Though earnings were up, the company saw weak numbers all around in February, due to the uncertainty surrounding a potential war in Iraq, Oracle CFO Jeff Henley said in a conference call. "Any time there is uncertainty, it effects negatively on IT spending," he said. And although Oracle made gains despite the uncertain climate, the stock still fell in after-hours trading. In published reports, analysts credit the war and investors' lack of confidence in Oracle's license revenues as key factors in the slide. Larry Ellison, Oracle's CEO, said in a company conference call that new license revenue was down 4 percent compared to the previous third quarter. Looking forward, the fourth quarter could be up or down, as the looming war with Iraq is a "wild card" that could negatively affect business, Henley said in the conference call. However, Oracle says it expects earnings in the fourth quarter to be between 12 cents and 15 cents a share, compared with 12 cents a year ago. The analyst consensus is currently 14 cents a share, according to Thomson First Call. Ellison said in the call that a significant source of new revenue will come from companies outsourcing the administration of Oracle databases and other suites to Oracle.