Oracle reported its revenue from new software fell 4% to $755m in its third quarter ending February 28 affecting both the company’s database and applications business, which were down 5% and 4% respectively to $602m and $140m. Services revenue fell 8% to $547m.

However, the company claimed nearly 80% growth in business from its outsourced eBusiness suite, from an admittedly small installation base.

Company chairman and chief executive Larry Ellison called the growth counter cyclical, adding business was coming through IBM’s subcontracting of its own customers’ infrastructure to Oracle. He claimed several hundred customers have outsourced their eBusiness suite.

Customers are interested in controlling their IT expenditure and not buying new products, Ellison said. Since the IBM acquisition of PricewaterhouseCoopers we are working more closely with IBM. That’s the shining star we’ve got right now.

Ellison attempted to put a positive light on the company’s decline in new software business, claiming license renewals indicate new business as these are effectively subscription-style renewals. Oracle’s license updates and product support revenue grew 16% to $1bn. Our software business is growing, Ellison said.

However, he joined company chief financial officer Jeff Henley in recognizing this was a tough quarter for Oracle thanks to uncertainty inflicted on corporate IT spending patterns by a potential war with Iraq. Business during the first two months prompted thoughts of a potential turn-around, Ellison said, but this was followed by a precipitous fall-off in February as customers postponed spending.

Deals greater than $500,000 fell too, from 35% of Oracle revenue to account for 33%.

For the period, Oracle reported a 12% increase in net income to $571m on total revenue that grew just 2.3% to $2.3bn. Earnings per diluted share were $0.11 compared to $0.09.

For the nine months, Oracle recorded a 7.5% fall in net income to $1.4bn on revenue that grew 3.7% to $6.6bn. Earnings per diluted share were static at $0.27.

Given the uncertainty of war with Iraq, Oracle gave its broadest possible advice for the fourth quarter of between minus 6% and plus 2% revenue growth and earnings per share of between $0.12 and $0.15.

Source: Computerwire