(Reuters) - Oracle Corp's (>> Oracle Corporation) sales fell more than expected in the first quarter, hurt by a strong dollar and a continued drop in licensed software sales and the company warned revenue could fall in the current quarter even on a constant currency basis.

Like its rivals such as SAP (>> SAP SE), IBM Corp (>> International Business Machines Corp.) and Microsoft Corp (>> Microsoft Corporation), Oracle is striving to boost Internet-based software sales to head off fast-growing competitors such as Salesforce.com Inc (>> salesforce.com, inc.).

But, analysts have said Oracle's cloud software business has not been growing fast enough to make up for declines in the 38-year-old company's licensed software business due to reasons ranging from slow customer adoption to tough competition.

Oracle's revenue declined 1.7 percent to $8.45 billion in the quarter ended Aug. 31, missing analysts estimates for the third quarter in a row.

The company said sales increased 7 percent on a constant currency basis. However, it forecast revenue to range between a fall of 2 percent to growth of 1 percent in the current quarter.

"On an apples-to-apples basis, that's disappointing. It's pretty clearly below consensus even at the top end," Wedbush Securities Inc analyst Steve Koenig said.

Oracle's shares fell as much as 2.8 percent in extended trading on Wednesday.

The company's net income declined 20 percent to $1.75 billion in the first quarter. Excluding items, it earned 53 cents per share, more than analysts' estimate of 52 cents.

Sales of Oracle's cloud-computing software and platform service rose 34 percent to $451 million. Sales of traditional software licenses fell 16 percent to $1.51 billion.

Wall Street was expecting cloud-based sales to increase 35 percent and licensed software sales to decline 17 percent, according to RBC Capital Markets.

"In the foreseeable future the database business continues to be a dark cloud over the company's head," FBR Capital Markets analyst Daniel Ives said.

Cloud-based software sales account for a small portion of Oracles' total revenue as they are subscription based, which promise a steady revenue stream but with lower margins.

Fundamentally, all of Oracle's software will be available on the cloud by the OpenWorld conference at the end of October, Co-Chief Executive Mark Hurd said on a call with analysts.

Ives said Oracle needs to make acquisitions to fuel growth in its cloud business and convince investors who are sceptical of a turnaround.

He named Splunk Inc (>> Splunk Inc), Tableau Software Inc (>> Tableau Software Inc), NetSuite Inc (>> NetSuite Inc) and Workday Inc (>> Workday Inc) as "game-changing" acquisitions for Oracle.

(Reporting by Abhirup Roy in Bengaluru; Editing by Savio D'Souza)

By Abhirup Roy