New Oracle Licenses Down 23% In 1QNew Oracle Licenses Down 23% In 1Q

Industry watchers hoping that Oracle's (ORCL-Nasdaq) first-quarter results might signal an upturn in IT spending were disappointed Tuesday. Sales were down more than 10% in the quarter ended Aug. 31 from the same period last year. New software licenses--a critical growth metric--were down 23%.

Although optimistic that business will improve through the rest of the fiscal year, Oracle execs were cautious in setting expectations. "Visibility beyond the upcoming quarter is minimal," CFO Jeff Henley says. While predicting gradual improvement in year-over-year results, Henley says, "the rate of recovery could be a little bit slower than the view I had a quarter ago." He could not say for sure if license growth would turn positive in the second half.

Oracle reported net income of $342.7 million, or 6 cents per share, on sales of $2.0 billion during the quarter. That compares with net income of $510.6 million, or 9 cents, on sales of $2.3 billion a year earlier. It also falls a bit short of Wall Street's expectations of 7 cents a share on sales closer to $2.1 billion.

The bottom line included an $80.6 million charge for losses related to equity securities, including Oracle's holdings in Liberate Technologies. Without that charge, net income was $386 million, or 7 cents per share. Oracle cut staff during the quarter by 600, to 41,500. Henley says another 500 to 600 positions would likely be eliminated this quarter.

Second-quarter revenue should be down 4% to 7% from a year ago with earnings of 8 to 9 cents per share, Henley says. Licenses are expected to be off 10% to 15% from a year ago.