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Oracle shares fall after earnings
REDWOOD SHORES, Calif. (CBS.MW) -- Oracle Corp. shares fell Wednesday after the company boosted net income 12 percent, but warned it may fall short of some analysts' fourth-quarter earnings targets.

The maker of database-management software reported third-quarter net income of $571 million, or 11 cents a share, up from $508 million, or 9 cents a share, a year earlier. Total revenue rose 2 percent to $2.31 billion, up from $2.25 billion, snapping seven straight quarters of year-over-year sales declines. The third quarter ended February 28.

New license sales fell 4 percent to $755 million, disappointing some analysts. Total application-related sales fell 3 percent to $609 million. The company more than made up with sales of software updates and product support that rose 16 percent to $1 billion.

"The license sales were not terrific by any stretch," said Richard Williams, analyst with Summit Analytic Partners in Summit, N.J. "But what bothers me, as you look at the company's cost of services, there was $26 million of unusual earnings that wouldn't have been there otherwise. That along with more than $70 million gained from currency translation to U.S. dollars, and you get two cents in earnings alone -- enough to go from a miss to a pretty good quarter."

As for Wall Street's consensus estimate, Oracle was expected to earn 10 cents a share on sales of $2.31 billion, according to Thomson First Call.

Oracle shares (ORCL) fell 6 percent to $11.52 in early Nasdaq trading. The stock has risen nearly 7 percent so far this year.

Jeff Henley, Oracle's chief financial officer, said he expects Oracle to post fourth-quarter earnings in a range of 12 to 15 cents a share. Analysts polled by Thomson First Call had been expecting earnings in a range of 12 to 16 cents a share, and 14 cents on average.

Customer demand had not been strong near the end of the third quarter, as economic anxiety rose worldwide due to pending military conflict with Iraq, Henley said in a conference call.

The CFO called the looming U.S.-led war with Iraq a "wild card" for customer demand in the company's fourth quarter.

Oracle increased its total operating expenses 2.5 percent in the quarter to $1.551 billion. The company's operating margin was 34.5 percent, vs. 34.6 percent in the same period last year.