- The Washington Times - Monday, March 16, 2009

SAN FRANCISCO (AP) - Oracle Corp. is scheduled to report its fiscal third-quarter financial results after the market closes Wednesday. Below is a summary of key developments and analyst commentary related to the period.

OVERVIEW: Key parts of Oracle’s business are believed to have held up reasonably well in the latest quarter despite the recession, but Wall Street’s expectations have been dampened as shriveling technology budgets have forced corporations to shelve new tech projects.

The Redwood Shores, Calif.-based company’s results for the fiscal third quarter, which covers December-February, will help illustrate how medium- to large-sized companies are managing their pursestrings when it comes to installing new business software.

Oracle’s bread-and-butter business _ selling database software and so-called “middleware,” which allows applications to talk to each other _ is under pressure because of the economic malaise. Yet analysts say those areas, and the company’s lucrative maintenance business, which provides annuity-like support fees on the software Oracle has already sold, likely weren’t as hard hit as Oracle’s applications business.

That’s because companies are always generating more data, and are usually willing to spend on software to help manage it even in tough time, the analysts say, whereas installing new applications is often seen as discretionary and takes longer for companies to recoup their investments.

The applications business is much smaller for Oracle than its other areas.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect Oracle to earn 32 cents per share, excluding one-time charges, on $5.46 billion in sales.

Another key figure Wall Street looks for is the value of Oracle’s software licenses sold during the period. Oracle has forecast new software license revenue to be flat to down 10 percent from last year, including currency fluctuations, which translates to a range of $1.44 billion to $1.6 billion.

Oracle’s profit guidance was for 31 cents to 33 cents per share, excluding one-time items.

ANALYST TAKE: Analyst Israel Hernandez with Barclays Capital wrote in a recent note to clients that a recent sell-off in Oracle’s stock is “overdone” and makes the shares attractively priced going into the earnings announcement. Still, Hernandez lowered the firm’s estimates on Oracle and said checks with Oracle’s partners suggest that new license sales could be weaker than expected. Hernandez said Oracle’s maintenance business still appears strong.

“In our view, while Oracle’s estimates are likely to move down over the near-term due to the macro and currency headwinds, we believe investors are underestimating Oracle’s ability to preserve or grow margin in the current downturn,” Hernandez wrote.

STOCK MOVEMENT: Oracle’s stock, which began December trading just above $15 per share, topped $18 in the quarter before hitting its 52-week low of $13.80 on March 9 on fears that the company’s numbers might come up short. Shares fell 66 cents, or 4.2 percent, to close at $14.90 on Monday.

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