Oracle posts further fall in sales in Q3

15 March 2002 Database and applications giant Oracle has reported a further fall in sales and profits in its fiscal third quarter to the end of February.

Revenues fell 16.6% to $2.23 billion (€2.52bn) from $2.67 billion (€3.02bn) achieved in the same period a year earlier. Net income dropped 12.8% to $508 million (€575m), down from $582.7 (€660m) posted a year earlier.

Oracle’s third quarter sales and net income are also down on the second quarter, in contrast to many rivals that have arrested sequential declines in sales and which are anticipating a more prosperous year of trading.

Most ominously, Oracle’s new licence sales slumped by a third to $777 million (€879.2m) and are forecast to fall heavily for the company’s fiscal year, ending in May 2002.

Licence sales were down in both the applications and the database business – Oracle’s two main divisions. Licence revenues from the database division fell 15.7% to $1.09 billion (€1.23bn) from $1.29 billion. Total database revenues fell 17.2% to $1.62 billion (€1.46bn).

The fall in database revenues can be attributed to a decline in the number of major development projects being started at the high end, combined with stiffer competition from IBM in the Unix and Microsoft Windows server database markets. It is also under pressure at the lower end from open source database packages, particularly MySQL and PostgreSQL.

However, the applications business was hardest hit, with licence sales falling 25.1% to $276.2 million (€312.5m) from $368.6 million (€417m). Overall, applications revenues fell by 15% to $612.3 million (€692.8m). Unless this decline is arrested, Oracle will soon face a challenge from rival PeopleSoft for its number two position in the enterprise applications market.

Oracle’s applications business has been hit by continuing quality problems with the latest version, Oracle 11i, which has been criticised for suffering from too many bugs – reflected by the high number of bug fixes issued by Oracle.

Furthermore, Oracle’s marketing is also out of step with current buying patterns. Oracle emphasizes the “end-to-end” nature of its applications suite at a time when customers are more cautious about monolithic applications, many prefer instead to buy software that addresses specific requirements.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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