Oracle's 2Q results to shed light on tech spending

Oracle's latest quarter may provide insight on effect of Obama re-election, fiscal cliff fears

Associated Press

SAN FRANCISCO (AP) -- Oracle Corp.'s latest quarterly earnings should provide some insights on how corporate and government spending on technology has been affected by President Obama's re-election and worries about the fiscal cliff hanging over the U.S. economy.

The results, due out after the stock market closes Tuesday, cover the three months ending Nov. 30.

That makes Oracle the first major technology company to report how it has been faring with corporate customers following the Nov. 6 presidential election and the beginning of negotiations to reach an agreement that would avoid triggering high tax rates and automatic government spending cuts beginning Jan. 1. The specter of higher taxes combined with reductions in government budgets has become popularly known as a "fiscal cliff" that could push the wobbly U.S. economy into recession.

Oracle, which specializes in business software, has promised investors that its fiscal second-quarter showing would be better than the fiscal first-quarter numbers that came out in late September. Revenue dipped during the first quarter, raising fears that big companies and government agencies already were becoming more frugal amid the economic uncertainty.

Analysts polled by FactSet anticipate a modest improvement in the latest quarter, with revenue increasing 2 percent from the same time last year to $9 billion. Excluding Oracle's charges for past acquisitions and certain other costs, analysts predict Oracle will earn 61 cents per share, up from an adjusted 54 cents per share last year.

Oracle executives assured investors back in September that the pace of business would pick up toward the end of this year. In a key indicator of future prosperity, the Redwood Shores, Calif. company forecast its software licenses and online subscriptions sold during the second quarter would rise by 5 percent to 15 percent from the same time last year. Licensing growth is important because it creates a stream of future revenue from software upgrades and maintenance.

Meanwhile, Oracle's efforts to sell more computer servers and other hardware are believed to still be flopping. Analysts believe Oracle's hardware revenue declined by more than 10 percent in the latest quarter.

Investors have been lukewarm about Oracle's growth prospects, keeping the company's stock at roughly same price since management provided its second-quarter outlook. The shares added 36 cents Monday to close at $32.32.

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