Updated from March 20

Oracle ( ORCL) beat Wall Street's EPS expectations by a penny in the third quarter, but the company's closely watched sales of new database licenses were soft.

Shares of Oracle fell after the company's report, and in early Friday trading they were recently off 46 cents, or 3.4%, to $13.26. "It was a very so-so quarter," said Kyle Flynn, an analyst with TCW, which holds shares of Oracle. "I don't see anything that will be a catalyst to run up the stock immediately."

The database giant earned a profit of $765 million, or 14 cents a share, on sales of $3.5 billion. A year ago, the company earned $540 million, or 10 cents a share, on revenue of $2.95 billion.

Excluding items, Oracle's EPS in the latest quarter was 19 cents, compared with the Thomson First Call consensus of 18 cents on revenue of $3.5 billion.

New database license revenue, the core business of the Redwood Shores, Calif., company, increased 4% to $827 million -- well below Wall Street's expectations of growth of 9% to $853 million. The appreciation of the dollar hurt sales by roughly 4 percentage points; without the currency effect, database sales would have grown by roughly 8%, said CFO Safra Catz.

CEO Larry Ellison added during a call with analysts that he expects to see database licenses grow by "double digits" in the near future, fueled by new high-margin options such as the company's recently announced Secure Enterprise Search, designed to retrieve corporate data from sources including databases, emails, text documents, spreadsheets and more.

Even so, Flynn said, "I don't buy the currency argument. I was expecting more." Moreover, estimates prepared by sell-side analysts included at least some of the currency headwind and much of the talk after the company's conference call centered on database sales. "That jumps right out," said Chuck Jones, technology analyst for Stein Roe, which also holds Oracle shares.

Jones characterized the quarter as "not bad," and said he expects it will take the company a few more quarters to work through its recent acquisitions. And if the dollar does not appreciate much more, the stock would be more likely to break out of its narrow trading range at that point, he said.

Sales of applications licenses, however, were stronger than expected, growing 77% to $269 million; analysts were looking for $234 million. However, the year-ago quarter included just two months of revenue from the company's acquisition of PeopleSoft and no Siebel revenue, so the comparison is flawed.

Software revenue as a whole was up 20%.

The license issue, though, should not obscure an important shift in Oracle's business model. In the just completed quarter, ongoing maintenance revenue accounted for roughly half of the company's total revenue, an increase of roughly 2% over last year, and 4% from the year before that. Since subscription revenue is practically automatic, margins are about 90%, said Ellison.

The surge in applications revenue represents the fruit of a $13 billion (net cash) acquisition spree, that included the hostile takeover of Peoplesoft -- which itself had swallowed J.D. Edwards -- Retek, Siebel Systems and a bevy of smaller companies.

Oracle's management reiterated its previous earnings guidance for the current quarter ending in May; it expects to earn -- on a non-GAAP basis -- 26 cents to 28 cents a share on sales ranging from $4.46 billion to $4.62 billion, a forecast that was in line with analysts' expectations.

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