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ORACLE MEETS EXPECTATIONS FOR NET PROFIT

New software sales, an important measure of performance, were listed at $1.15 billion, which was better than expected.

Shares of Oracle, which makes database and business-automation software, initially jumped more than 12 percent after the company posted its profits, but those gains were sharply cut after the chief financial officer, Jeffrey O. Henley, said the sales visibility going forward was "very limited." He said software sales for the first quarter could be down as much as 25 percent from a year ago.

Shares of Oracle last traded at $9.27 on the electronic trading system Instinet. In regular trading, shares fell 27 cents, to $8.93.

Oracle, based in Redwood Shores, said its fiscal fourth-quarter net income had been $655.9 million, or 12 cents a share, compared with net income of $854.9 million, or 15 cents, a year earlier.

Total revenue in the period ended May 31 was $2.77 billion, down from $3.29 billion a year ago.

Revenue for database software was $904.3 million, down 29 percent from a year ago. Sales of applications — software that automates things like accounting and customer service — were $245.7 million, which was down 27 percent from a year ago but up from the prior quarter.

Excluding a charge from Oracle's investment in Liberate Technologies, Oracle earned $760 million, or 14 cents a share, in the fourth quarter.

Analysts' average prediction had been that Oracle would post a net profit of 12 cents a share on total sales of $2.55 billion, according to the research firm Thomson First Call. Wall Street's estimate was lower than Oracle's forecast from mid-March, when Mr. Henley said fourth-quarter earnings should be 13 cents or 14 cents a share.

Mr. Henley told reporters that the company expected "marginal single-digit revenue growth" in fiscal 2003.

The revenue report came a day after California lawmakers wrapped up an inquiry into the state's $95 million contract with Oracle.

Assemblyman Dean Florez, a Democrat who is chairman of the Joint Legislative Audit Committee, said in Sacramento that the inquiry showed the Oracle deal "happened because of political influence and the influence of money."

Oracle has been on the defensive since April, when the state auditor said the contract had been rushed through without competitive bidding and with insufficient administrative oversight. The auditor said the contract would end up costing California taxpayers $41 million for software the state did not need.

Oracle strongly defended the agreement and said it would save California tens of millions of dollars.

But criticism of both the company and the administration of Gov. Gray Davis continued, particularly after disclosures that Oracle had pushed hard to have the contract signed and had shortly afterward made a large donation to Governor Davis's re-election campaign.

The governor reacted by firing three officials involved in the deal, revamping the state's procedures for high-tech purchases and instructing aides to dismantle the Oracle deal.