Oracle sees profit shortfall

March 1, 2001: 5:44 p.m. ET

Software maker will miss estimates by 2 cents per share; cites slowdown

NEW YORK (CNNfn) - Software maker Oracle Corp. said Thursday it expects to report earnings for the quarter which just ended that are below the Street's current expectations, pinning the blame on the slowing U.S. economy.

After the closing bell, Oracle (ORCL: Research, Estimates) said its preliminary results for the fiscal third-quarter ended February 28 show that the company turned an operating profit of 10 cents per share. Analysts had generally expected Oracle to earns 12 cents per share, according to a survey conducted by First Call.

"License growth was strong in the first two months of [the quarter], and our internal sales forecast looked good up until the last few days of the quarter," Larry Ellison Oracle's CEO, said in a statement.

"However, a substantial number of our customers decided to delay their IT spending based on the economic slowdown in the United States," he added. "Sales growth for Oracle products in Europe and Asia Pacific remained strong. The problem is the U.S. economy."

And that's a refrain that has become common among big name technology outfits recently, as one after the other has come out in recent weeks with revenue warnings of its own.

Just last week, Sun Microsystems (SUNW: Research, Estimates), the leading supplier of Web servers, pointed to the U.S. economy as the reason it will log revenue growth in the quarter ending in March that is nearly half what it previously had anticipated.

In January, semiconductor leader Intel lowered its growth forecast in the face of the slowing U.S. economy. Even Cisco Systems (CSCO: Research, Estimates), which for the past several years has been on a growth tear and last month missed its earnings targets for the first time in nearly seven years, has reined in its revenue-growth targets, pinning the blame primarily on slower spending among U.S. telecommunications services providers.

Oracle executives said they cannot predict when the company's sales growth will improve because of the uncertainty in the U.S. economy. The company is expected to provide more detailed financial guidance when it reports its latest quarterly results on March 15.

Shares of Oracle rose $2.38 to $21.38 on Nasdaq ahead of the announcement. They fell $1.75 to $19.62 in after-hours trade.