Oracle Corp's revenue missed expectations in the February quarter, adding to concerns on Wall Street about sluggish enterprise IT spending and sending shares of the world's No. 3 software maker sharply lower.
Oracle posted a 2 percent drop in new software sales and Internet-based software subscriptions to $2.3 billion in its fiscal third quarter.
The company had forecast a 3 to 13 percent jump in new software license and cloud subscription revenue. Investors scrutinize new software sales because they generate high-margin, long-term maintenance contracts and are an important barometer of future profit.
The company's shares fell more than 7 percent in after-hours trading after it posted quarterly results on Wednesday.
Investors worry that governments and corporations around the globe may postpone spending on technology projects because of uncertainty over the economy, particularly in Europe.
"Business sentiment and confidence is way down. People are more cautious right now in business than they are in the stock market. That's how we get very high valuation multiples on stocks, but businesses are pulling back," said Richard Williams, an analyst at Cross Research.
Revenue from Oracle's troubled hardware division, which it acquired through the $5.6 billion purchase of Sun Microsystems in January 2010, fell to $671 million from $869 million in the year-ago quarter. The company had predicted revenue would stay flat or fall 10 percent from a year earlier.
The division's revenue has fallen every quarter since it closed the Sun deal. Chief Executive Larry Ellison has said he expected hardware systems revenue to start growing in the fiscal fourth quarter, which begins March 1.
Oracle will offer its current-quarter projections and comments on performance in a teleconference with analysts later on Wednesday.
Overall, Oracle's revenue dipped 1 percent to $9 billion, missing the $9.382 billion analysts had expected on average according to Thomson Reuters I/B/E/S.
GAAP net profit was unchanged at $2.5 billion. GAAP earnings per share were 52 cents, up 6 percent from the year-ago period. Its adjusted earnings per share were 65 cents, shy of 66 cents expected by analysts.
Shares in the software company fell 7.2 percent to $33.19 after hours, from a close of $35.765 on Nasdaq.
(Reporting by Noel Randewich; Editing by Richard Chang)