* New software sales rise 17 percent
* Forecasts new software sales growth 3 to 13 percent in Q3
* Hardware product revenue tumbles 23 percent
* Shares rise in extended trade
(Rewrites first paragraph, updates share action)
By Jim Finkle and Noel Randewich
BOSTON/SAN FRANCISCO, Dec 18 Technology giant
Oracle Corp said software sales growth will stay strong
into the new year despite fears that there could be big tax
hikes and U.S. government spending cuts that could cause a slump
in spending by customers.
Shares of the world's No. 3 software maker rose 1.3 percent
after it reported fiscal second-quarter revenue and earnings
that surpassed Wall Street forecasts.
Oracle President Safra Catz told investors that businesses
were still looking to spend money already allocated to 2012
"Folks want to close deals," she told analysts on a
conference call following the earnings release on Tuesday. There
has been "no negative impact on pricing. Pricing remains very
good for us."
Oracle said software sales would grow 3 to 13 percent this
quarter, which runs through February. It expects fiscal
third-quarter hardware products sales to be flat to down 10
percent from a year ago.
The company's software and hardware forecasts were roughly
in line with Wall Street expectations, according to FBR Markets
analyst Daniel Ives.
Oracle reported that software sales and cloud software
subscriptions rose 17 percent from a year earlier to $2.4
billion in its fiscal second quarter ended Nov. 30.
It had forecast that new software sales would climb 5 to 15
percent from a year earlier, when it last reported earnings on
"I would call it an early Christmas present," Ives said.
"It's a positive sign for the overall technology sector."
Investors pay close attention to new software sales because
they generate high-margin, long-term maintenance contracts and
are an important gauge of the company's future profits.
Oracle posted a second-quarter profit, excluding items, of
64 cents per share, beating the average analyst forecast of 61
cents according to Thomson Reuters I/B/E/S.
Jefferies & Co analyst Ross MacMillan said Oracle's results
are encouraging for other makers of business software, many of
which end their quarter on Dec. 31.
OFF A CLIFF
Some investors have worried that corporations would postpone
spending on technology projects because of uncertainty over the
year-end deadline for Congress and U.S. President Barack Obama
to reach a compromise to thwart an automatic rise in tax rates
and government spending cuts.
Failing to reach a deal, economists say, could lead to
another U.S. recession. Catz said Oracle's customers are still
spending on software.
"What's going on in Washington - I don't know who it's
necessarily influencing today. But I can tell you, our customers
have been spending money with us even here in December."
On Tuesday, Oracle forecast earnings per share in the
current fiscal third quarter of 64 to 68 cents, excluding items.
That was about level with an average forecast for 66 cents.
"It tells you that there's still money being spent by
enterprises on software. It's not like the world has ground to a
halt," MacMillan said.
The picture was not so bright for Oracle's troubled hardware
division, which it acquired with its $5.6 billion purchase of
Sun Microsystems in January 2010. The division's revenue has
fallen every quarter since it closed that deal.
Hardware systems product sales fell 23 percent from a year
earlier to $734 million. Oracle had forecast that hardware sales
would drop between 8 and 18 percent.
Chief Executive Larry Ellison told analysts he expected
hardware systems revenue to start growing in the fiscal fourth
quarter which begins March 1.
Oracle shares rose to $33.30 in extended trade after closing
at $32.88 on Nasdaq.
(Reporting by Jim Finkle; Additional reporting by Noel
Randewich; Editing by Gary Hill, Richard Chang and Jeremy