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Oracle's Devil in the Details

Updated from Dec. 18

Oracle's generally in-line second quarter wasn't strong enough to make investors smile, and the stock slipped in early Tuesday trading.

Shares of Oracle were recently off 4.6% to $17.09.

To be fair, the quarter had pockets of real strength: revenue was up 26% and profit rose 21%.

But the database giant didn't quite achieve the growth in new software license revenue, a metric looked at closely by Wall Street, and cash flow was not as strong as some analysts had expected, although operating cash flow was up $1 billion year over year.

"The Street was prepared for some weakness," said Loomis Sayles analyst Tony Ursillo. But there was a bit more than expected, particularly in new software licenses, he added.

However, the company's strong guidance and optimistic report on the strength of its deal pipeline were redeeming features, he said in an interview. Loomis Sayles holds shares of Oracle.

Oracle earned a profit of $967 million, or 18 cents a share, on sales of $4.2 billion. Excluding items such as stock-based compensation, the company earned 22 cents a share.

The report's headline items were a bit better than expected; analysts polled by Thomson First Call were looking for a profit of 22 cents a share on revenue of $4.15 billion.

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