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SAN FRANCISCO - A stronger dollar could trim Oracle's (ORCL) - Get Free Report growth during the coming quarter.

On the upside, Oracle's big improvement in

operating margins

should provide a buffer against slower revenue growth going forward.

On Thursday, Oracle reported year-over-year revenue growth of 18% to $5.42 billion for the first fiscal quarter ended in August.

The Redwood Shores, Calif. company's operating margin, excluding special charges, rose 350 basis points year over year to 40.1%.

That should provide a cushion against the recent strengthening of the dollar. President Safra Catz projected that today's currency exchange rates could take 3 percentage points off the top of revenue growth in the second quarter.

Oracle projected second-quarter top line growth of 12% to 15% in constant currency, implying revenue of $6.01 billion to $6.17 billion, excluding special items.

But factoring in the impact of a stronger dollar, growth could slip to 9% to 12%, implying revenue of $5.85 billion to $6.01 billion. Analysts were expecting revenue of $6.23 billion, according to Thomson Reuters.

Gartner analyst Kenneth Chin says he's concerned about the impact a stronger dollar will have on Oracle's future. "If the dollar strengthens a lot more, they could potentially get hit harder on foreign exchange," he says.

And with the turmoil in the financial markets, Oracle's deal-closure cycles will likely lengthen, creating more fluctuation in new-license revenue from quarter to quarter, Chin predicts.

Meeting revenue expectations "will be more challenging because deals will take longer to close and potentially be deferred," Chin says. Gartner expects deal closure cycles to lengthen across the entire tech sector.

Yet investors gave a thumbs up to Oracle's report, driving the stock up $1.82, or 9.7%, to $20.57 Friday, when the tech-heavy


was up 3.2%.

Oracle's results may have helped the software sector generally. The

iShares S&P GSTI Software Index

(IGV) - Get Free Report

was recently up 4.4%.

Database and middleware software competitor


(SY) - Get Free Report

gained $3.33, or 11.3%, to trade recently at $32.86.

Oracle's core database software revenue grew 21% during the quarter just ended, while new middleware licenses rose 35% year over year, according to CEO Larry Ellison. "We think we either passed


(IBM) - Get Free Report

or are about to pass IBM" as the leading middleware vendor, he said.

President Charles Phillips hinted that the company's current database product, 11g, which was released in 2007, will come in for a significant update in the current quarter. The company will add "a major dimension to the product" that Phillips characterized as "more than a feature."

"It puts Oracle into a new segment of the database market, which should help us sustain consistent market share gains," Phillips said. The new element will be announced next week at the company's annual user conference.

The weak spot in Oracle's first-quarter results appeared in the market for business applications. The macro economy appears to be taking a toll on growth in applications sold to large business clients, especially in Europe, JMP Securities analyst Patrick Walravens wrote in a note Friday. JMP makes a market in Oracle shares.

New application sales faced a tough comparison with the first quarter of last year, when the category grew 65%, according to Oracle.

And the applications business will face another difficult comparison with the second quarter of last year, when new applications licenses rose 63%, according to Citigroup analyst Brent Thill. Oracle is an investment banking client of the firm.