Oracle sees software growth amid weak hardware sales

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SummaryHardware product sales fell to $779 million in its fiscal first quarter ended August 31.

Oracle Corp's hardware sales tumbled 24 per cent from a year earlier as the technology giant struggled to turn around its Sun computer division at a time when businesses are tightening technology budgets.

The company run by Silicon Valley billionaire Larry Ellison reported on Thursday that hardware product sales fell to $779 million in its fiscal first quarter ended August 31. It had forecast a decline of 7 to 17 per cent.

It's a very competitive market and there is not a lot of strong demand, said Forrester Research analyst Andrew Bartels.

He said rivals including Cisco Systems Inc, Dell Inc, Hewlett-Packard Co and International Business Machines Corp are taking market share away from Oracle in the computer market.

Global Equities Research analyst Trip Chowdhry said his research shows that the market began to improve in August, emerging from a terrible climate in the first two months of the quarter.

Oracle also reported that new software sales rose 6 per cent from a year earlier to $1.6 billion, in line with its own forecasts.

Oracle met that key revenue target after reorganizing its sales operation in the United States, its biggest market, following the departure of Executive Vice President for North American sales and consulting Keith Block.

The world's No. 3 software maker had forecast that new software sales would climb between 0 to 10 per cent from a year earlier when it last reported earnings on June 18.

Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.

Oracle posted first-quarter profit, excluding items, of 53 cents per share, matching the average forecast of analysts surveyed by Thomson Reuters I/B/E/S.

Oracle shares edged lower to $32.08 in extended trade after closing at $32.26 on Nasdaq.

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