Oracle software sales rise offsets weak hardware

BOSTON, Wed Mar 21, 2012 – Oracle Corp. beat Wall Street’s earnings estimates as new software sales came in at the high end of the company’s forecast, offsetting a sharp drop in hardware revenue.

The software maker’s stock rose 1.5 percent after the news, in sharp contrast to the sell-off three months ago when its second-quarter profit missed analysts’ forecasts for the first time in a decade.

“The software business bounced back,” Citigroup analyst Walter Pritchard said. “If you look at where the value is at Oracle, it would be the software business.”

Oracle estimated that new software sales this quarter will range from a 2 percent drop to growth of as much as 8 percent, translating into $3.6 billion to almost $4 billion. The midpoint of that forecast, of 3 percent growth, is a sharp drop from the 19 percent increase in the fourth quarter of last year.

Yet Oracle Chief Financial Officer Safra Catz suggested on a conference call that the outlook may not be so grim. She said she had been “somewhat conservative” in calculating that forecast.

Still, shares in the company run by billionaire Larry Ellison pared half of the gains made earlier in the extended trading session. They had rallied 3 percent shortly after it posted earnings that beat Wall Street’s lowered expectations.