Oracle's profits decline 15% due to PeopleSoft

SAN FRANCISCO — Fresh off its latest conquest, business software maker Oracle Corp. said its quarterly earnings dropped 15 percent because of the financial fallout from its $10.6 billion acquisition of PeopleSoft Inc.

Excluding the complex accounting for the PeopleSoft takeover, Oracle's earnings were a penny above analyst estimates.

Oracle released the results Tuesday afternoon, shortly after the Redwood Shores-based company announced it had outbid German rival SAP to acquire another software maker, Retek Inc., for $11.25 per share, or $669 million.

Meanwhile, Oracle continues to digest PeopleSoft — a pivotal acquisition that is supposed to boost the company's earnings by at least $400 million annually. The company previously valued the PeopleSoft deal at $10.3 billion, but Tuesday said it cost slightly more to complete.

Oracle earned $540 million, or 10 cents per share, for the three months ended in February. That compared with net income of $635 million, or 12 cents per share, at the same time last year.

Revenue for the period totaled $2.95 billion, an 18 percent increase from $2.51 billion last year.

The earnings included $249 million in charges to account for severance pay and other expenses arising from the PeopleSoft takeover.

Oracle also adjusted its quarterly revenue by $143 million as part of the PeopleSoft deal.

Oracle expects to absorb another $100 million in restructuring charges during the next few quarters, co-president Safra Catz told analysts during a Tuesday conference call.

Before PeopleSoft succumbed in December, Oracle spent more than $111 million waging an 18-month battle to seal the deal.

If not for the charges in its latest quarter, Oracle said it would have earned 16 cents per share. Analysts surveyed by Thomson First Call had forecast earnings of 15 cents per share.

Oracle predicted it will earn 22 cents to 24 cents per share in the current quarter ending in May, excluding PeopleSoft charges. The current analyst estimate is 22 cents per share.

"We are optimistic," Oracle CEO Larry Ellison assured analysts during a Tuesday conference call.

The company delivered its report and earnings forecast after the stock market closed. Oracle's shares fell 16 cents to close at $12.49 on the Nasdaq Stock Market, then declined another 14 cents in extended trading.