Oracle's stock took a beating in the first hour of US trading on Friday morning, dropping 21 per cent after the business software company warned on Thursday that third-quarter earnings will fall short of expectations.
In trading volume of more than 82 million shares, Oracle (ORCL) fell $US4.50, or 21.05 per cent, to $16.87 a share in morning trading.
Oracle announced last Thursday that its revenue for the third quarter ending February 28 would rise about 9 per cent. That falls below the 15 to 17 per cent range expected by analysts, according to First Call/Thomson Financial. Oracle projected that earnings will come in at $0.10 a share and analysts had expected $0.12 a share.
Oracle chief executive officer Larry Ellison blamed the revenue slowdown on the US economy and customers holding off on IT spending, according to a statement.
The news soured some financial institutions on the company. A research analyst at First Call/Thomson Financial counted at least eight financial institutions that downgraded Oracle rankings on Friday.
Bank of America Securities bumped Oracle from a buy rating to a neutral rating. The Goldman Sachs Group moved its rating from strong buy to buy, while Morgan Stanley Dean Witter & Co. announced its rating moved from strong buy to neutral.