Oracle Shares Sink

A dismal quarter from Oracle dragged technology stocks down on Wednesday, but tech analysts say the sell-off is overdone. Oracle's key sales metric, revenue from new software licenses, rose a measly 3% last quarter, compared to the 11% that Wall Street analysts had expected. Last year, new license sales increased 21% in the same quarter. Shares of Oracle sank 14% Wednesday on the news, dragging down the broader technology market with it. The Nasdaq Composite index, which is technology-heavy, fell 2% by mid-day. But Oracle said its licensing problem was not a demand issue. It attributed the sales slowdown to the extra approval steps corporate IT managers now have to go through to finalize deals, which tends to occur in times of economic trouble. Red Hat, designer of a popular version of the Linux operating system for servers, also said customer demand wasn't the driver of the weak outlook it delivered Tuesday night. Red Hat cited currency conversion as its challenge. Red Hat shares fell 6% on Wednesday. Despite a worldwide economic slowdown, IT spending in 2012 is expected to rise at about 50% of companies, according to Nucleus Research. CDW's IT Monitor survey, released earlier this month, found that 50% of medium-sized and 48% of large businesses are planning large-scale IT investments within the next six months. "I don't think we need to be worried about Oracle," said Rebecca Wettemann, analyst at Nucleus Research. "Companies are planning to spend more on tech in 2012." Still, investors remained cautious, sending SAP, one of Oracle's chief rivals, down 6%. Other competitors sank too. IBM fell 4%, CSCO dropped 2% and Hewlett-Packard fell 3%.