Oracle dropped in early trading today after reporting a decline in hardware sales, fueling concern the database software developer may not be benefiting as much as predicted from its Sun Microsystems acquisition.
Hardware sales declined 6 per cent to $1.16 billion, Oracle said in a late statement yesterday. The company had forecast in March an increase of 6 per cent to 12 per cent.
Shares fell as much as 5.1 per cent in early trading today following publication of the results.
Chief executive Larry Ellison bought Sun last year to capitalise on demand for the servers and databases used in data centres. While the hardware results may reflect Oracle's effort to pare less-profitable machines from the lineup, they were disappointing enough to overshadow better-than-predicted performance in profit and sales of new software licenses.
Hardware gross margin, a measure of profitability, rose to 56 per cent in the fourth quarter from 46 per cent last year, a sign Oracle is making headway selling higher-margin machines.
Oracle is adding sales staff, preparing new computers for release this year and pitching hardware support contracts to boost sales of Sun machines, executives said on a conference call.
Profit excluding certain costs was 75 cents a share in the quarter that ended May 31st. Sales climbed 13 per cent to $10.8 billion, meeting analysts' predictions.