Ahead of the Bell: Oracle to break down 3Q results

SAN FRANCISCO (AP) ? Investors will find out how well Oracle is coping with stiffer competition when the business software maker releases its latest quarterly earnings.

The fiscal third-quarter results, due out after the stock market closes Tuesday, cover the three months ending in February ? a period that coincided with a steady expansion of U.S. payrolls that signaled that the companies buying much of Oracle’s software are spending again.

That means if Oracle stumbled in the quarter, it won’t be as easy for the company to blame a shaky economy. That’s what Oracle’s executives did at the end of last year when the company’s performance for the September-November period missed analysts’ targets.

In an effort to close more deals, Oracle added another 1,700 sales representatives late last year.

Oracle’s biggest challenges now appear to be coming from longtime foil, SAP, and rapidly growing rivals such as Salesforce.com Inc. and Workday that are changing how companies buy and use software.

Salesforce and Workday are among a crop of software specialists that offer applications as a subscription service that can be accessed on any device with an Internet connection. The online approach to software, nicknamed “cloud computing,” is a departure from the industry’s long-established practice of licensing and installing applications on individual machines kept in the buyer’s offices.

Oracle is trying to expand its cloud-computing services through acquisitions, but some analysts are worried the company isn’t adapting quickly enough to address the competitive threats.

Disappointing returns in Oracle’s computer hardware division also have been a problem. The company hoped to create a one-stop technology shop for big businesses by buying Sun Microsystem Inc. for $7.3 billion in 2010, but the concept hasn’t been widely embraced.

Oracle predicted its sales of hardware products during the fiscal third quarter would fall by 5 percent to 15 percent from last year.

The company, which is based in Redwood Shores, Calif., also provided a tepid forecast for software sales. The mid-point of Oracle’s projection called for new software licenses to rise by 5 percent from the same time last year. New software licenses are closely watched by investors because they generate future revenue for maintenance and upgrades.

Analysts, on average, expect Oracle to earn 56 cents per share, excluding charges for past acquisitions and other costs unrelated to the company’s ongoing business. That would be an uptick from adjusted earnings of 54 cents per share at the same time last year. Revenue is expected to edge up by about 3 percent from last year to $9 billion.