Cloudy outlook for Oracle

Thunderclouds - Wikimedia CommonsThings are not well at the database outfit Oracle – sales are falling and the company claims things could get worse.

Oracle sales fell more than expected in the first quarter, hurt by a strong dollar and a continued drop in licensed software sales and the company warned revenue could fall in the current quarter even on a constant currency basis.

Oracle is striving to boost Internet-based software sales to head off fast-growing competitors such as Salesforce.com but what it is doing does not appear to be working.

Analysts think that Oracle’s cloud software business has not been growing fast enough to make up for declines in the licensed software business.

Oracle’s revenue declined 1.7 percent to $8.45 billion in the quarter ended Aug. 31, missing analysts estimates for the third quarter in a row.

The company said sales increased 7 percent on a constant currency basis. However, it forecast revenue to range between a fall of 2 percent to growth of 1 percent in the current quarter.

The company’s net income declined 20 percent to $1.75 billion in the first quarter.

Sales of Oracle’s cloud-computing software and platform service rose 34 percent to $451 million. Sales of traditional software licenses fell 16 percent to $1.51 billion.

Wall Street was expecting cloud-based sales to increase 35 percent and licensed software sales to decline 17 percent,.

Cloud-based software sales account for a small portion of Oracles’ total revenue as they are subscription based, which promise a steady revenue stream but with lower margins.

Fundamentally, all of Oracle’s software will be available on the cloud by the OpenWorld conference at the end of October, Co-Chief Executive Mark Hurd said on a call with analysts.