Updated from 8:15 a.m. EST

Oracle

(ORCL) - Get Report

, which posted mixed fiscal third-quarter results, was trading sharply lower Wednesday and dragging down much of the software sector with it.

In recent trading, Oracle was off 95 cents, or 7.76%, to $11.30. Halfway into the session, more than 59.6 million shares of the database giant had changed hands, compared to an average full-day volume of 39.8 million.

Nearly all of the major software players are losing ground, with

PeopleSoft

(PSFT)

off $1.48, or 8.11%, to $16.77;

Mercury Interactive

(MERQ)

off $2.49, or 7.2%, to $32.10; and

Symantec

(SYMC) - Get Report

off $2.85 a share, or 6.16%, to $43.42 a share, taking the biggest hits.

Oracle's so-so performance and inability to give a clear fourth-quarter forecast clouds the outlook for much of enterprise software. And it didn't take long for analysts to voice their displeasure.

Jason Brueschke of Pacific Growth Equities downgraded

WebMethods

(WEBM)

to equal weight from over weight, saying "We are growing more concerned about WEBM's quarter following ORCL's Q3 results, which indicated weakness across all geographies and products."

After the close on Tuesday, Oracle reported a 12% year-over-year increase in net income for the quarter ended Feb. 28. Total revenue rose 3% to $2.31 billion from $2.25 billion, ending seven straight quarters of year-over-year revenue declines.

But revenue derived from new software licenses was disappointing, coming in at the low end of the company's guidance, and margins declined a bit.

New software-license revenue was down 4% to $755 million; the company was expecting the key measure to range from negative 5% to positive 5%.

During a call with analysts Tuesday, Oracle CFO Jeff Henley followed the lead of

Fed

Chairman Alan Greenspan and said the looming war and the uncertain global economic climate made it impossible to give a close forecast of fourth-quarter results. Instead, he gave an unusually wide range of outcomes.

If Oracle's results were seen as Oracle-centric, the market wouldn't react so severely. But it appears the problem is larger.

Said Brueschke: "Oracle and

Tibco

reported that demand fell significantly at the end of February. Oracle was more dire, stating that the weakness reflects a fundamental change in the demand environment, rather than a sales-execution or company-specific problem."