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Oracle scrapes by in latest quarter

The database giant beats earnings estimates by a penny a share on slightly lower revenue for its fiscal fourth quarter.

Oracle edged past analysts' estimates Monday, as fourth-quarter revenue dipped slightly from a year ago.

The database giant earned a fourth-quarter profit of $855 million, or 15 cents a share, compared with last year's fourth-quarter profit of $926 million, or 15 cents a share.

Wall Street analysts polled by First Call had predicted earnings of 14 cents a share.

For the fourth quarter, ended May 31, revenue fell 3 percent, from $3.37 billion in 2000 to $3.27 billion this year. Analysts had expected Oracle to generate $3.4 billion in revenue.

The fourth-quarter sales figure for database software was flat at about $1.2 billion, while application software revenue fell 24 percent to $338 million compared with last year, Oracle executives said. Revenue from consulting, education, support services and other areas reached $1.65 billion.

In after-hours trading, Oracle's shares jumped $1.35, from $14.84 to $16.19. Banc of America Securities analyst Bob Austrian said Oracle did not have a good quarter after a Herculean effort to increase its software revenue.

"The earnings are better than feared and revenue was lighter than hoped. So huge cost controls has been their secret this quarter," he said. "It's done a decent job in a tough environment. It was impressive in its profitability, but getting there through cost controls is hard to sustain. They've lost ground in applications."

Because of Oracle's bellwether status in the technology sector, investors closely watched the company's results Monday for any sign of an economic turnaround.

Oracle executives blamed slower software sales on the economic slowdown that has afflicted the United States and has spread to Europe. Oracle CFO Jeff Henley said the company expects flat sales growth in the upcoming first quarter and earnings of 8 cents per share.

Henley, however, said he's cautiously optimistic that the economy will pick up by year's end.

"For the third quarter in a row, there's less demand and less visibility than in a normal economy. It feels to us that in Q4 we hit the bottom, and if anything, demand could be getting better in Q1," Henley said in a conference call with analysts. "This will probably start modestly."

Oracle, which announced a profit warning for the third quarter, managed to stave off an earnings warning for the fourth quarter. Like other technology companies, Oracle previously said the economic outlook was too cloudy to accurately predict fourth-quarter results.

In March, Oracle executives said they expected the economy to worsen in the fourth quarter and planned for flat revenue growth that would result in earnings of 15 cents a share.

To pump up sales of its flagship database software, Oracle last Thursday shipped its new 9i database and announced a new pricing plan to be more competitive with rivals IBM and Microsoft, which sell their databases at cheaper prices.

During the conference call, Oracle CEO Larry Ellison said once the economy improves, he expects quarterly database sales to grow at a 15 percent to 20 percent rate, while application sales will grow at a 50 percent to 100 percent pace.

For the fiscal year, the company's net income increased 25 percent to $2.6 billion, or 44 cents a share. Fiscal-year revenue increased 7 percent to $11 billion.