Oracle Corp, the world's second-biggest software company, on Tuesday posted a 15 percent drop in quarterly net profit due to charges related to its $10.6 billion purchase of rival PeopleSoft. Oracle's profit, excluding charges, was ahead of the average Wall Street expectation, and the company raised its full-year profit forecast, but shares fell about 2 percent as revenue missed analysts' targets and on what some analysts called disappointing software application sales.
Oracle Co-President and interim Chief Financial Officer Safra Catz said Oracle expected total costs related to PeopleSoft to be about $611 million. She added that Oracle expected a restructuring of PeopleSoft to be completed in the next six months.
Net income for Oracle's fiscal third quarter ended February 28 fell to $540 million, or 10 cents a share, from $635 million, or 12 cents a share, a year ago, Oracle said.
Revenue rose to $2.95 billion from $2.51 billion, the Redwood Shores, California-based company said.
Excluding items, Oracle reported third-quarter earnings of 16 cents a share, 1 cent ahead of the analyst consensus.
But Wall Street had expected revenues of $3.05 billion, according to Reuters Estimates.
Analysts said Oracle's results were generally healthy, as they expected, but were disappointed with the performance of Oracle's software applications, traditionally a small part of its business, but a primary driver behind Oracle's motivation to buy software makers PeopleSoft and Retek.
Citing an improved outlook for the fourth quarter, Oracle raised its full 2005 forecast for a profit before items of 64 cents to 65 cents a share from a previous forecast of 62 cents a share, Catz said.
Analysts had been expecting 63 cents, according to Reuters Estimates.
Oracle said license revenue, or sales of new software, in its mainstay database business rose 12 percent to $795 million in the quarter from $707 million a year ago.
New sales of applications software, where Oracle competes closest with German rival SAP, rose 9 percent to $152 million from $140 million.
About $31 million of its third-quarter applications revenue stemmed from PeopleSoft's business, Catz said.