Oracle profits drop slightly

Oracle has announced earnings slightly below the company's previously issued guidance, hurt by the strengthening dollar.

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Oracle has announced earnings slightly below the company's previously issued guidance, hurt by the strengthening dollar.

The software firm said GAAP income had fallen one percent year-on-year, to $1.3 billion (£870 million) on $5.6 billion in revenue for its fiscal 2009 second quarter, ended 30 November. Revenue was up 6 percent.

The strengthening dollar cost the company about $0.03 per share in earnings, Oracle said.

Software licensing revenue was up 8 percent during the quarter, but new software sales were down 3 percent, compared to year-ago numbers.

In a conference call with financial analysts Oracle executives blamed the drop in new software sales on currency fluctuations, which have reduced the value of some international sales, when measured in dollars.

The company signed its "largest on-demand sales force automation contract this quarter," beating out software-as-a-service rival Salesforce.com, it said.

In that particular deal, the unnamed customer had been using the Salesforce.com product before dropping it for Oracle, said company chief executive Larry Ellison. "This quarter was conspicuous in a series of competitive winds against Salesforce.com," he added.

Ellison also hinted that Oracle could keep up its string of software company acquisitions, even if some companies may not want to be purchased at current market valuations, Ellison said. "Some companies have much more attractive evaluations right now, but I'm not sure they'd be wildly enthusiastic about selling for cash," he said. Oracle is looking at a "potential opportunity for large acquisitions if the price is right," he added.

With IT spending estimates for 2009 slashed in recent months, Oracle is under pressure to cut costs. However the company did not announce any layoffs in its earnings release, issued Thursday afternoon.