Oracle expects strong Q2, firms up tech outlook

Tue Sep 20, 2011 8:12pm EDT
 
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By Sinead Carew and Edwin Chan

(Reuters) - Oracle Corp forecast earnings for the current quarter that are higher than expected, as well as robust software sales, offering some reassurance to investors hoping that global technology spending is holding up.

Its shares rose 3 percent after it said new software sales, a gauge of future profit because they generate high-margin long-term service contracts, increased 17 percent in its first fiscal quarter, ended August 31. Analysts had expected 15 percent.

Oracle also forecast software sales growth for the current quarter in a range of 6 percent to 16 percent, which was much higher than the flat to 10 percent estimated by ThinkEquity analyst Brian Schwartz.

Executives also said they are confident of market share gains against rivals such as SAP in Europe, a region that along with the Middle East and Africa accounts for a third of its business but is grappling with a widening economic crisis.

"I'm certainly encouraged by that license revenue growth. In the near term that's a very positive indicator," Schwartz said, even as he noted that the company's overall revenue forecast was lighter than expected.

Oracle forecast a 4 percent to 8 percent gain in revenue this quarter, translating into sales of $9 billion to $9.3 billion, slightly lagging forecasts of $9.36 billion.

It also forecast earnings before one-time items of 56 cents to 58 cents per share for the current quarter, compared with the 56 cents expected by Wall Street.

The outlook for worldwide technology spending darkened after warnings by major technology vendors from Dell Inc to Cisco Systems Inc. Governments are scaling back purchases to reduce deficits while corporations are tightening budgets to cope with an uncertain economic picture.   Continued...

 
<p>The company logo is shown at the headquarters of Oracle Corporation in Redwood City, California February 2, 2010. REUTERS/Robert Galbraith</p>