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To: JohnG who wrote (114964)	3/3/2002 1:06:31 PM
From: JohnG	Read Replies (1) \| Respond to of 152472

ORCL warned Fri. ng Oracle Warns on Third-Quarter, Asia Sales Blamed Fri Mar 1, 8:36 PM ET By Lisa Baertlein SAN FRANCISCO (Reuters) - Oracle Corp., the world's second-biggest software vendor, warned on Friday its fiscal third-quarter earnings would miss its original forecast by a penny per share, hurt by slow sales in Asia. Oracle's stock fell about 8 percent on the after-hours warning, dropping to $14.71 from a close of $15.99 on Nasdaq. "It is definitely going to send a chill through the space on Monday," Merrill Lynch analyst Chris Shilakes told Reuters. Oracle now forecasts earnings of 9 cents a share. In January, the database software giant said it expected a 10-cent profit, flat sequentially and year-over-year. "While software sales in the United States and Europe increased slightly over the second quarter, that increase was not enough to offset a slowdown in Asia," Oracle Chief Executive Larry Ellison said in a statement. The Asia/Pacific region accounted for about 14 percent of Oracle's total revenue in fiscal 2001. "Based on preliminary estimates, it appears that our third quarter year-over-year growth rates for software sales and operating income were about the same as those for the second quarter," Oracle Chief Financial Officer Jeff Henley said. Second-quarter software sales, often referred to as license revenues, declined 26 percent from the previous year. Operating income fell a bit more than 13 percent during the same period. The Redwood Shores, Calif.-based software maker declined further comment through a spokeswoman. It is scheduled to announce results on March 14. 'IT'S KIND OF GRIM' Analysts said Oracle had missed clearing a low bar in its third quarter, which ended on Thursday. "It's weaker out there than was built into their guidance," Sanford C. Bernstein analyst Charles Di Bona told Reuters. A year ago, Oracle posted third-quarter earnings of 10 cents a share -- missing its profit expectations for the first time in ages after corporate wallets slammed shut in response to a meltdown in the technology sector. "This was supposed to be a lay-up. The compares were supposed to be getting easier ... It's kind of grim," said Mark Verbeck, a principal in the San Francisco office of ThinkEquity Partners, an investment banking and institutional research firm. Each of the three analysts interviewed by Reuters said that Oracle will likely have to bring down its fourth-quarter forecast. The current estimate is for per-share earnings 2 cents to 3 cents higher than the 15-cent profit the company reported in the year-earlier period. Shilakes on Friday morning issued a warning on Oracle's fourth-quarter outlook after his research found "pretty severe discounting" and an absence of large deals in the U.S. and Europe. Oracle recently told analysts that its win rate in its core database business had not changed, but that customers were choosing more often to buy a new, cheaper version of its database. "My gut reaction is that is pricing pressure," Di Bona said. In recent quarters, International Business Machines Corp. and Microsoft Corp. have been aggressively pushing their database products. Nevertheless, Oracle remains the dominant player in the space with more sophisticated offerings. "Customers are driving a hard bargain ... Oracle is not immune to that. They're having to discount to be competitive with the other gorillas in the space," Shilakes said.