Oracle's Guidance Disappoints

SAN FRANCISCO -- Basking in a spectacular fourth-quarter report from Oracle(ORCL - Cramer's Take - Stockpickr), investors' hopes for more of the same in the first quarter were dashed late Wednesday.

Company executives said on a conference call that they expect more difficult first-quarter comparisons.

CFO and Co-president Safra Catz projected 18% year-over-year revenue growth, implying a top line of $5.42 billion, and EPS, excluding special items, of 17 cents or 18 cents for its first quarter, which ends in August.

Analysts were expecting a top line of $5.47 billion and EPS, less items, of 27 cents.

BEA Systems, which Oracle acquired in April, will contribute from $50 million to $60 million in new-license revenue during the first quarter.

"We are up against very tough first-quarter comparisons" due to 35% growth for the same period last year, Catz said. "But so far, things look very good. Deals are closing." Despite landing more new-license revenue for any quarter in a decade, some potential deals remained opened at the end of May. And North America is doing very well in spite of economic headwinds, she added.

"We have strong pipelines in North America and worldwide and feel confident about our prospects in Q1," Catz said.

Although shares were up initially in after-hours trading, they dropped 75 cents, or 3.3%, to $21.80 after guidance was issued.

Oracle's fourth-quarter revenue jumped past the Street's estimates Wednesday and boosted its earnings by 27%.

As expected, new license applications sales in the Americas rose a scant 4% year over year in constant currency during the fourth quarter, although database software and middleware grew a very healthy 19%.