Oracle's quarterly results disappoint Wall Street; shares fall

SAN FRANCISCO (Reuters) - ORACLE (ORCL.NY)Corp on Tuesday reported increased revenue and profit for its fiscal third quarter, but the results disappointed investors, who were looking for signs of a sustained turnaround, and its shares fell sharply.

The company said new software sales and Internet-based software subscriptions in its fiscal third quarter ended February 28 rose 4 percent from a year earlier.

The company had forecast that new software sales and subscriptions would be up between 2 percent and 12 percent in the quarter. New software sales are scrutinized by investors because they generate high-margin, long-term maintenance contracts and are an important indicator of future profit.

"They still have heavy lifting ahead in order to declare this a turnaround story," Dan Ives, an analyst with FBR, said. "Investors need to see more. It continues to be a ?prove me' stock in the eyes of investors."

For the third quarter, Oracle said overall revenue rose 4 percent to $9.31 billion. That was a little below the $9.36 billion analysts had expected on average.

Net income was $2.56 billion, up 2 percent. Earnings per share, which reflected a decrease in the number of shares outstanding, rose 8 percent to 56 cents.

On an adjusted basis, Oracle earned 68 cents per share.

Shares of Oracle fell 5.4 percent in extended trade, after closing up 1.62 percent at $38.84 in regular trade on the New York Stock Exchange.

(Reporting by Noel Randewich; Editing by Leslie Adler)