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What's Good for Oracle Is Not Good Enough for the Street

Investors appear frustrated by the company's seasonal volatility.

August was slow,



said after posting what turned out to be disappointing quarterly results late Tuesday.

Excuses, excuses, after-hours investors scolded.

The software maker reported after the stock market closed that its net income rose 21%, to $236.7 million, or 16 cents a share, in its fiscal first quarter, from $195 million, or 13 cents a share, a year earlier. The earnings matched the median consensus of software analysts of about 16 cents a share, according to

First Call/Thomson Financial


But just meeting -- not exceeding -- those expectations was enough to scare investors. The stock had already gained more than 80% over the last three months. Many who were buying the stock on Tuesday were expecting the earnings numbers to beat the analysts' estimates.

After Oracle posted its results, its stock fell more than 6 points in after-hours trading. It had closed regular

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trading at 45 7/16, down 5/16 for the day, and a point and a half shy of the 52-week high it hit last week.

The company said its total revenue for the quarter ended Aug. 31 rose 13%, to $1.98 billion, but software license revenue rose 9% and database software sales increased just 8%.

Jeffrey O. Henley, the company's executive vice president and chief financial officer, said the earnings were typical of the software industry's seasonal volatility.

"It's really tough to get anybody to work in August," he said, referring to consumers of business software applications.

Investors, it seems, were not buying the quarterly volatility argument -- or the stock.

"This has been a three-year if not lifetime-to-date frustration with the company's volatility," said Robert Austrian, a software industry analyst with

Banc of America Securities

. "It raises the question whether the weakness in the quarter was purely a quarterly phenomenon or an indication of the year."

The company, best known for the database software it sells to other businesses, is currently shifting to deliver software primarily over the Internet. In a conference call with industry analysts, Henley predicted a strong demand for the company's products after the threatened year 2000 computer problems have passed, when airlines and financial services businesses begin setting up new database systems.