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SAN FRANCISCO - Oracle Corp shares fell 5 per cent today after a Lehman Brothers analyst said quarterly sales of the company's database software would likely miss Wall Street expectations.
The stock drop marked the biggest decline is more than a year for the world's largest database maker,
which generates the lion's share of its overall revenue from sales of such software.
"We believe investors are likely to find database results disappointing," Lehman analyst Israel Hernandez said in a note on Wednesday, citing the brokerage's research into quarterly sales trends and advising clients to sell a stock that has climbed 36 per cent since the start of the year.
He said he expects the business software maker to miss his forecast for quarterly database sales of US$871 million and attributed the shortfall to problems closing deals in North America.
Yet Kim Caughey, who helps manage nearly US$1 billion in assets at Fort Pitt Capital Group, questioned whether Oracle would miss Wall Street's database software sales targets and said the Lehman note simply spooked investors to lock in their profits.
She noted that both IBM and Microsoft Corp recently reported solid database sales and said she doubted something is going on industry-wide even if Oracle does end up missing targets.
"If indeed Oracle misses, then I would say that it is an Oracle issue," she said. "But don't know they are going to miss."
Oracle does not provide a forecast for sales of its databases, which last quarter grew at a 10 per cent clip. The company also will group middleware software with its database product when it next reports financial results on December 18.
The steep stock drop comes as Oracle has finally begun to win over investors after spending US$20 billion over the past three years to push into the market for business applications as its core database software market matures.
Oracle chief executive Larry Ellison is also betting the company will win more customers for its databases as it gains traction in the market dominated by SAP AG of Germany for business applications that help companies automate everything from human resources to accounting to payroll.
Oracle shares have gained about 31 per cent since June 15 when it first told investors of stronger-than-expected software license revenue for the fiscal fourth quarter. At the same time shares in its major rival SAP have risen about 2 per cent.
Oracle stock closed down 5.2 per cent at US$17.88 on the Nasdaq today.
Oracle could not be reached for comment.
- REUTERS