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Analyst jitters send Oracle stock down

Shares of the database software maker continue to tumble after a Wall Street analyst downgrades the stock because of concerns of slower sales.

    Oracle shares rebounded today, after company executives reassured investors that the software giant expects strong sales for the current quarter and fiscal year.

    Earlier in the day, Oracle's stock dropped $6.88, or 10 percent, to $62.63 after a Wall Street analyst downgraded Oracle on fears of slower software sales growth. Oracle's shares rebounded by market close, down $1.50 to $68.

    "There has been no change in the outlook for Oracle's financial results," Oracle chief financial officer Jeff Henley said in a statement. "We believe this is going to be a terrific year with both our database and application software revenue growing faster than the previous fiscal year."

    Robertson Stephens analyst Eric Upin cut Oracle's rating from a "buy" to "long-term attractive" earlier today.

    The database software maker's stock yesterday fell 12 percent, or $9.50, to $69.50, after Bloomberg News reported that Henley told financial analysts growth in database sales would slip this quarter from last quarter, but would rise again early next year. Sales of the software, which stores and collects information, rose 32 percent year-over-year last quarter. Henley in a statement today said that it was not a sales or earnings warning.

    Henley told analysts yesterday that overall sales look strong for the current quarter. He reiterated that he expects business software growth rates of 50 percent to 100 percent the rest of the year after growing only a disappointing 42 percent the previous quarter. He also told analysts that database growth should be about 20 percent.

    While other financial analyst firms such as Morgan Stanley Dean Witter and Chase Hambrecht & Quist maintained "buy" ratings, Upin said he downgraded Oracle because of concerns that the database software market is maturing and because the company hasn't proven that it can sell Oracle E-business Suite 11i, Oracle's Web-enabled suite of business software.

    "We believe it is difficult to make an argument for the stock to move meaningfully higher over the near term," Upin said in a research report. "We believe the application suite...represents a significant departure for the company and the industry...resulting in more limited revenue visibility over the next two to three quarters."

    Other analysts were more gung-ho about the company's prospects.

    "We continue to see that Oracle is making progress on cementing its position as one of the dominant, influential e-business providers to large and midsize customers on a global basis," analyst James Pickrel of Chase H&Q said in a report.