REDWOOD CITY -- Software giant Oracle (ORCL) reported fourth-quarter earnings Thursday that beat Wall Street's expectations but its sales were slightly lower than analysts had forecast and some experts were dismayed at the pace it was licensing its software to customers.
The company -- whose profit rose 10 percent from a year ago to $3.8 billion -- said it earned 80 cents a share on sales of $10.9 billion. Analysts surveyed by Thomson Reuters generally were expecting earnings of 75 cents a share on sales of $11.1 billion.
But Oracle said it saw only a 1 percent increase in new software licenses, which was much less than what many analysts had expected. That worries some industry experts, because software licenses are a closely watched indicator of Oracle's future revenue.
"Oracle headline numbers were respectable, but the shortfall on the all-important new-license front will disappoint investors," said FBR Capital Markets analyst Daniel Ives. Despite some strong product offerings, he added, the company also "faces some bumps in the road given the challenging IT spending environment."
Oracle also announced it will move its stock ticker from the Nasdaq Stock Market to the New York Stock Exchange effective July 15
Before it announced its earnings, Oracle's stock dropped 88 cents, or nearly 3 percent, to close at $33.21. In after-hours trading, its stock price slipped another $3 or about 9 percent.
Among the world's largest sellers of business-oriented database programs and other software, Oracle has been snapping up other companies to bolster its Web-based business-management software applications. But it has faced growing competition from other firms providing similar services.
Oracle also sells servers and storage equipment, which it acquired by buying Sun Microsystems in 2010. While sales of these hardware products remain modest, Oracle has high hopes for some of them -- especially its Exadata line, which combines hardware with software for high-performance data processing.
Some analysts are worried about Oracle's prospects.
"Our research is now indicating that Oracle Exadata is struggling," Global Equities Research analyst Trip Chowdhry said in a recent note to his clients. "Seems to us that Oracle's decision to go the hardware route is not working."
In addition, Chowdhry said it was "bad news for Oracle" that Keith Block, who had been a top Oracle executive for about 26 years and who had criticized the Sun purchase, has recently been named president and vice chairman at Oracle competitor Salesforce.com.
In a separate note, Canaccord Genuity analysts speculated that Oracle President Mark Hurd, a longtime confidant of Oracle's CEO Larry Ellison, could be feeling heat over the pace of Oracle's hardware sales.
"Some investors have asked us if Oracle's shares would go up if Hurd left," Canaccord's analysts said. "Our answer is 'yes' " if the hardware business fails to perk up.
But they were generally optimistic about Oracle, as are some other analysts.
In a recent report, Credit Suisse's market watchers noted that several of Oracle's hardware offerings "are gaining customer interest in the market." Despite Oracle's growing list of competitors, they added, "Oracle has been gaining share at the expense of smaller niche vendors with their 'best of breed' products as customers now prefer to consolidate with one large vendor rather than dealing with multiple niche vendors."
Wells Fargo's analysts predicted "the company is on track to return the hardware business to a growth position over the course of the next couple of quarters."
Contact Steve Johnson at email@example.com or 408-920-5043. Follow him at Twitter.com/steveatmercnews.