Oracle Tops Forecasts, Declares Dividend; Shares Jump

Oraclereported a profit and sales that surpassed Wall Street's expectations, and shares of the business software company popped more than 7 percent after hours. Oracle also declared its first-ever dividend.

The business software maker said after markets closed Wednesday that it earned 35 cents a share excluding one-time items in its fiscal third quarter, compared with a profit of 30 cents a share last year.

Analysts who follow Oracle expected the company to turn in a profit of 32 cents a share on sales of $5.4 billion, according to an average of those forecasts that was calculated by Thomson Reuters.

Sales reached $5.5 billion in the most recent quarter. Oracle reported a topline of $5.37 billion in the same period last year.

Oracle's headquarters in Redwood City, California.
Paul Sakuma
Oracle's headquarters in Redwood City, California.

Oracle shares were up more than 7 percent in extended trading after finishing the regular session up 2.79 percent at $15.83 .

Oracle said Wednesday that it would pay a dividend of 5 cents per share, or 20 cents annually, its first such payment to shareholders since the company went public in March 1986.

New software sales fell a less-than-expected 6 percent from a year earlier to $1.5 billion. Analysts had said they were expecting them to decline about 12 percent as the weak economy and currency fluctuations hurt sales.

The drop in new software sales was offset by an 11 percent increase in fees that Oracle collects for maintenance for programs it has previously sold to clients. It generally charges them an annual fee of 22 percent of the software's original cost for help-desk service, patches, bug fixes and upgrades to new versions of its programs.

"They beat on just about every metric," said JMP Securities analyst Patrick Walravens, who has a "market perform" rating on the stock. Neither Walravens nor his firm holds shares in Oracle.

Forecast for Fourth Quarter

Oracle said during its earnings conference call that it expects its fourth-quarter earnings per share, minus one-time items, to range between 42 cents and 46 cents. Revenue for the quarter will be down 10 percent to 14 percent, the company said.

Expectations for Oracle's fiscal third quarter had been dampened because of shriveling corporate technology budgets. Oracle's main business is selling licenses for database software and so-called "middleware," which lets different pieces of software talk to each other, and raking in annuity-like support fees tied to those sales. But corporations have been delaying big-ticket tech buys to cope with the recession.

- Reuters and AP contributed to this report.