The world's No. 3 software maker projected a 1 to 11 percent rise in new software licenses and Internet-based subscriptions in the May quarter - an indicator of future performance. But investors focused on a 2 percent slip in the February quarter that badly missed Wall Street's targets.
Oracle's February quarter revenue miss was its worst since the November quarter of 2011.
"What we really saw was the lack of urgency we sometimes see in the sales force, as Q3 deals fall into Q4," Chief Financial Officer Safra Catz told analysts on a conference call.
"Since we've been adding literally thousands of new sales reps around the world, the problem was largely sales execution, especially with the new reps as they ran out of runway in Q3."
Wall Street remains concerned about tepid spending by governments and corporations in an uncertain global environment, but Catz dismissed those fears.
Oracle is also struggling with its hardware division and facing greater competition in cloud or Internet-based software from the likes of International Business Machines Corp and SAP AG and nimbler rivals like Salesforce Inc and Workday Inc.
Oppenheimer analyst Brian Schwartz said Oracle's May-quarter software sales projection was in line with expectations.
"That's probably a little hint that they've gotten off to a good start in Q4, that some of those deals that slipped in Q3 likely closed in Q4," Schwartz said.
Some investors still worry that governments and corporations around the globe may postpone spending on technology projects because of uncertainty over the economy, particularly in Europe.
"Business sentiment and confidence is way down. People are more cautious right now in business than they are in the stock market. That's how we get very high valuation multiples on stocks, but businesses are pulling back," said Richard Williams, an analyst at Cross Research.
Revenue from Oracle's hardware division, which it acquired through the $5.6 billion purchase of Sun Microsystems in 2010, fell to $671 million from $869 million in the year-ago quarter.
The division's revenue has fallen every quarter since it closed the Sun deal and Chief Executive Larry Ellison had said in December he expected hardware systems revenue to start growing in the fiscal fourth quarter.
Oracle projected its hardware product revenue for the current quarter would fall between 12 and 22 percent.
"There are areas that continue to be in transition, like the hardware business and the overall move to the cloud," said FBR Capital Markets analyst Daniel Ives. "They obviously hit a speed bump but the company is cautiously optimistic."
Oracle posted a 2 percent drop in new software sales and Internet-based software subscriptions to $2.3 billion in its fiscal third quarter. Investors scrutinize new software sales because they generate high-margin, long-term maintenance contracts and are an important barometer of future profit.
"It doesn't help that the sequester deadline is on the last day of our quarter, and so that has a little bit of an impact here in North America, but not necessarily anywhere else," Catz said. "The economy has been as it is in Europe for a while."
Oracle's revenue miss - about 4.4 percent below the average forecast - was its worst since the November quarter of 2011, when it fell short of target by 4.5 percent, according to Thomson Reuters data.
Next week, Oracle will start deliveries of its latest generation of servers, built with a record-breaking microprocessor, Ellison said.
Overall, Oracle's revenue dipped 1 percent to $9 billion, missing the $9.382 billion analysts had expected on average according to Thomson Reuters I/B/E/S.
GAAP net profit was unchanged at $2.5 billion. GAAP earnings per share were 52 cents, up 6 percent from the year-ago period. Its adjusted earnings per share were 65 cents, shy of 66 cents expected by analysts.
Shares in the software company fell 8 percent to $32.95 after hours, from a close of $35.765 on Nasdaq.
(Reporting by Noel Randewich; Editing by Richard Chang)
By Noel Randewich