Analysts hop off Oracle bandwagon

Oracle Corp. (Nasdaq: ORCL) is facing the downgrades this week after the company warned that its services revenue could suffer from year 2000-related issues as well as from a general slump in the ERP (enterprise resource planning) industry.

In April, Oracle warned that analysts' expectations for its fourth quarter were on the high side, though nothing significant came out of a meeting with analysts held then.

On Wednesday, SoundView and Credit Suisse First Boston cut their ratings while Merrill Lynch maintained its opinion on the world's largest database software company after a meeting with the company.

But Merrill's Christopher Shilakes cut his fourth quarter estimate to 32 cents a share from 35 cents and dropped his expectations for fiscal 1999 three pennies to 83 cents a share. Fiscal 2000 estimates were trimmed a penny to $1.05 a share.

Revenue estimates for the May quarter was cut to $2.81 billion from $2.86 billion by Shilakes, who expects services sales growth drop to 23 percent from 26 percent. Shilakes expects license growth to dip a percentage point to 10 percent. Fiscal 2000 sales were also cut to $10.4 billion from $10.46 billion.

Wendell Laidley at CS First Boston lowered his fourth quarter forecast to 30 cents a share from 33 cents and this fiscal year to 97 cents a share from $1.02 a share. Laidley also dropped his share price target to $32 a share from $39.

The First Call Corp. estimate of 30 analysts expects Oracle to earn 32 cents a share for its fourth quarter, which is due the week of June 17.

Oracle, along with other companies that sell software that manages the operations of companies supply chain and finances, have been hurt as customers divert funds out of buying updated ERP software as they prepare their computer systems for the year 2000. Oracle has also been hurt by the slump in Asia, which accounts for 11 percent of sales.