Computer software giant Oracle Corp warned that its third-quarter earnings will fall below forecasts because of a sudden slowdown in sales caused by (he country's slumping economy.

Preliminary results for the third quarter show earnings will he 10 cents a share. Analysts sun eyed by First Call/ Thomson Financial were expecting earnings of 12 centers a . share. The company earned 8 cents a share in the year ago quarter.

"A substantial number of our customers decided to delay their IT spending based on ihe economic slowdown in the United Stales." Larry Ellison. Oracle's chief executive, said Thursday*.

Until the last days of the quarter. which ended Wednesday, the makci of database and e-business software expected to beat forecasts. Then the senior executives of its customers began deferring purchases.

/ A bunch of deals were already approved at (he vice president level." Ellison said. “Once it got up 10 the CFO and CEO level, (hey were pushed oil. We have a lot of nervous senior executives looking at this economy and being nervous.”

Oracle expected about dlrs I billion in operating income in (he third quarter and will end up with about IJS $900 million, he added.

Total revenue grew by about 9 per cent. While some revenue streams continued to expand, (hough a( a slower rate (han predicted. growth in its core database division was flat or slightly negative.

Ellison said (he slowdown in sales is a mailer of purchases delayed. not canceled.

' This is not a matter of they are nut going to buy. They would just like to wait 30 day s or 60 day s." he said. "They 're just looking at this economy. Everyone is try ing lo gel a read on this economy.”

Bui analysts said if the economy does not improve. Oracle may be hard hit during the fourth quarter - traditionally its strongest.

“A certain amount of deferrals of software sales arc never made up." said Mark Verbeek, an analyst al Epoch Partners.

“No one knows how long this is going to continue and how much worse it gets." said Jim Mendelson. an analyst at Wit SoundView. “The wildcard is just when will the May quarter come out

\ltcr weeks of warnings from other high-lech companies, many analysts had been expecting at least some bad news from Oracle, the world's second-largest software maker.

“Over ihe Iasi two weeks, we've continued to have a bunch of bombs go off around us so that almost every major technology play er has encountered some type of problem." Mendelson said. “Increasingly, we were fighting the odds to argue Oracle would not."

Redwood Shores. California-based Oracle will officially release the details its third-quarter results March 15.