Oracle Feels Effects of Strong Dollar

The company posted second-quarter revenue of $5.6 billion, a 5% increase from the same period last year, but below analysts' forecast.
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Database giant

Oracle

(ORCL) - Get Report

said its second-quarter revenue came in below analysts' estimates Thursday, as the company felt the effects of the strengthening dollar and a weakening U.S. economy.

Oracle posted second-quarter revenue of $5.6 billion, a 5% increase from the same period last year, but below analysts' forecast of $5.84 billion.

The firm's software revenue grew 8% year-over-year, although new license sales, a key indicator of the company's performance, were down 3%. Oracle's revenue from services was down 2% year-over-year.

The Redwood Shores, Calif.-based company earned 25 cents a share on net income of $1.3 billion, compared with 25 cents and just over $1.3 billion in the second quarter of 2007. The strengthening dollar cut 4 cents off the company's earnings.

Assuming that exchange rates held steady, however, Oracle's software revenue would have risen 14%, with new software license sales and service revenue both rising 5% year-over-year.

Excluding charges, Oracle earned 34 cents a share, matching analysts' consensus estimate.

Oracle, which competes with

Salesforce.com

(CRM) - Get Report

,

SAP

(SAP) - Get Report

and

IBM

(IBM) - Get Report

, also couldn't resist taking a swipe at its rivals Thursday.

"We signed our largest on-demand sales force automation contract this quarter -- this was just one of several recent wins over Salesforce.com," Oracle CEO

Larry Ellison

said in a prepared statement.

He also alluded to the recent

hardware partnership

with

Hewlett-Packard

(HPQ) - Get Report

. "We also sold our first database machine, launching an all new and important business for Oracle," he said.