UPDATE: Oracle 4Q Net Down 7.2% On Stronger Dollar, Econ Weakness

Oracle Corp.'s (ORCL) fiscal fourth-quarter profit declined 7.2% as the stronger dollar and continuing economic weakness weighed on revenues and earnings.

But stronger-than-expected new license sales and continuing cost management helped the company beat Wall Street expectations, giving some comfort that the company is weathering the storm.

Shares were up 2.8% at $20.44 in recent after-hours trading, reflecting broad comfort that the company is managing well through the downturn. Oracle's stock has been rebounding since hitting a three-year low in March.

The Redwood City, Calif.-based database and business software giant has been hurt by current impacts over the past three quarters, and a decline in revenue in the latest quarter highlights how tech companies are still facing a difficult economic climate.

Oracle, which has spent roughly $30 billion on acquisitions in the past four years to boost its portfolio of products, made a surprise bid for Sun Microsystems Corp. (JAVA) in April, which brings it into the technology hardware sector for the first time in a significant way. Oracle has a strong track record with acquisitions, which have added to both top-line and earnings growth, but investors will be watching keenly for detail on how the company plans to generate value from its new hardware assets.

For the quarter ended May 31, Oracle reported earnings of $1.89 billion, or 38 cents a share, down from $2.04 billion, or 39 cents a share, a year earlier. The stronger dollar reduced earnings by 5 cents a share in the latest quarter.

Excluding stock-based compensation, restructuring and acquisition-related costs, earnings fell to 46 cents a share from 47 cents. Assuming fixed exchange rates, the latest figure would have been 51 cents.

Revenue fell 5% to $6.86 billion, but would have risen 4% if currency rates were constant. Software revenue dropped 3% and services revenue slid 16%. At fixed exchange rates, software revenue rose 6%, while services revenue fell 7%.

Analysts were expecting earnings, excluding stock-based compensation, restructuring and acquisition costs, of 44 cents, on revenues of $6.47 billion, according to a Thomson Reuters survey.

In March, the company said it expected earnings of 42 cents to 46 cents a share on a 10%-to-14% drop in revenue, assuming the currency exchange rates at the time of the projection.

Operating margins, meanwhile, rose to 42% from 40.8%.

New license revenue, a key measure of software growth, dropped 13% to $2.7 billion, and fell 4% assuming exchange rates held steady. In March, Oracle had predicted a 5%-to-15% decline at constant currency rates.

Analysts were expecting new software license revenues of around $2.5 billion, according to a survey by Thomson Reuters.

President Charles Phillips said the company took market share from rival SAP AG (SAP) in every region of the world. Phillips said in Europe, for example, business increased 5% in constant currency, compared with a decline of 27% for SAP in their most recent quarter.

-By John Kell, Dow Jones Newswires; 201-938-5285; [e-mail]

-By Jessica Hodgson, Dow Jones Newswires; 415-439-6455; [e-mail]