Oracle said computer sales in its fourth quarter ended May 31, dropped the 6 percent to 1.2 billion dollars compared to the same quarter a year earlier. When services are added, the company's hardware revenue was flat, at 1.8 billion dollars.
Oracle threw hardware as an important part of its future and the poor showing raised fears that the acquisition of 7.4 billion Sun was failed to live up to its billing.
Shares of Oracle fell by more than 4 percent in after-hours trading. Investors have long been suspicious about Oracle can turn around business server Sun, who struggled before the acquisition was completed in late January.
Oracle's fourth quarter was the first time investors were able to see a full-on-year comparison of that segment owned by Oracle.
Brendan Barnicle, an analyst with Pacific Crest Securities, said the results underwhelming hardware sector were not too worrying. The results of hardware, however, were still much lower than the company had forecast, he said.
"They have identified this early that they would streamline the business of Sun," said Mr. Barnicle. "It takes a while to do, but all of us hoped that would have done by now."
Oracle execs emphatically rejected the idea that they are suffering for hardware sales. Throw the decline as part of a deliberate strategy to pare back unprofitable sales. Two policies, the resale of products of other companies and sale of low-cost servers, not the Oracle strategy, said Mark Hurd v., Oracle Co-President.
"I just think we are following the fundamentals of building a solid business," he said in a conference call. He described the lost revenue as "worthless".
Oracle profit still beat expectations. Excluding certain one-time charges, earnings were 75 cents per share; analysts had expected 71 cents per share, according to a survey conducted by Thomson Reuters.
Oracle has reported that the total net income in the fourth quarter rose 36 percent, to $ 3.2 billion, or 62 cents per share, from $ 2.4 billion, or 46 cents, in the year-ago quarter.
The company said revenue climbed 13 percent to 10.8 billion, from $ 9.5 billion. Analysts had expected 10.75 billion.
The decline in sales of hardware was more than made by increases in the main business of Oracle software. New license software revenue, a critical measure of the activity of the company because it brings future recurring revenues, grew 19 percent to $ 3.7 billion.
Executives also boasted Exadata, a more recent initiative to sell software bundled with the server for large companies. More than 1,000 Exadata machines installed around the world, Oracle said, and the current fiscal year in goal is to triple that number.
Oracle has estimated that its revenues would rise before the fourth 10 to 13 per cent, which falls within analysts ' expectations. Adjusted income should be 45-48 cents per share, in line with the average estimate of 46 cents by analysts.