The big issue from last night’s earnings report from Oracle (ORCL) was a weaker-than-expected February quarter for applications license revenue. The news has ORCL shares sliding this morning, as you’d expect. But it also raises questions about March quarter results for other applications software companies. Some analysts are rallying to the stock’s defense this morning, asserting that despite Oracle’s cautionary comments, the company is actually a more defensive name than other software plays; one theory is that as IT budgets tighten, companies will want to reduce their vendors lists. And no one plays in more parts of the IT application sector than Oracle.

Here are some excerpts from some of this morning’s commentary on Oracle and the implications of the news for the rest of the software sector:

  • Sasa Zorovic and Sarah Friar, Goldman Sachs: Zorovic contends the issues Oracle raised will be felt widely: “hesitation in closing deals, financial services weak, weakness in North American in particular, caution on deal closing rates.” He sees trouble in Oracle for a variety of companies, including Informatica (INFA), Parametric (PMTC), Salesforce.com (CRM), Kenexa (KNXA), RightNow (RNOW) and Taleo (TLEO). But Friar says she still views Oracle as “one of the most defensive names” in the group given a broad maintenance base, higher international exposure and ability to cross-sell.
  • Brent Thill, Citigroup: He has similar concerns. “ORCL’s Apps weakness elevates our concerns on the broader software universe, particularly in the area of more discretionary spending - SAP and ORCL dominate the Enterprise Apps market.”
  • John Difucci, Bear Stearns: “The shortfall on the top line was entirely due to relatively weak applications license sales, which were even weaker than appears. This may not bode well for other apps stocks.”
  • David Hilal, Friedman Billings Ramsey: “While we acknowledge the tough environment, we think the company’s pipeline, combined with its closure rate assumptions, support the guidance and possibly may prove it to be conservative in the seasonally strong fiscal fourth quarter.”
  • Charles DiBona, Bernstein Research: “While we believe that ORCL remains a reasonable defensive investment, it is not surprising to see that it’s not immune to the weakness in the U.S. economy generally and the financial sector in particular.”
  • Patrick Walravens, JMP Securities: “For the software sector as a whole, the Oracle results were not promising,” he writes. “As the biggest, safest enterprise software vendors, Oracle is better positioned in an economic downturn than the rets of the enterprise software vendors…we expect things to be challenging for the smaller vendors over the next couple of quarters.”

In today’s trading:

  • Oracle is down $1.47, or 7%, at $19.47.
  • SAP is down $2.83, or 5.5%, at $49.10.
  • Salesforce.com is down $1.17, or 2%, at $58.07.
  • RightNow is down 6 cents, or 0.5%, at $11.31.
  • Kenexa is down $1.14, or 5.7%, at $18.84.
  • Taleo is down 72 cents, or 3.5%, at $19.46.
  • Informatica is down 82 cents, or 4.7%, at $16.70.