The world's second largest software company, Oracle, predicts its profits will bounce back next spring after the past few months' disappointing results.

The forecast came as the company said its profits fell during the July to September quarter compared with a year earlier.

"It was our toughest quarter in a decade," said chief executive Larry Ellison.

"When the economy improves, we will earn a lot more."

Fine future

Analysts had expected the fall in profits, so Oracle's share price slipped only slightly on the news before rising as investors took in an optimistic growth forecast.

"The bad news is that the quarter is about the worst they've ever had," said Banc of America Securities analyst Bob Austrian.

"The good news is, even in this horrible environment, their cash flows and margins are extremely strong."

"We think the business has hit bottom," said Mr Ellison.

"Things have stabilized and things are getting better slowly."

Investment freeze

Oracle's net income of just less than $550m (�379m) for the quarter had been pushed lower by a sharp slowdown in computer and software purchases by US firms due to the global economic weakness and the 11 September attacks.

"[Oracle is] going to have to wait for a rebound in spending," said Merrill Lynch analyst Chris Shilakes.

The software giant's fight for market share, in a business where its main competitors include the computer firms Microsoft and IBM, has been extremely tough in recent months.

Shares in the company have fallen almost 50% during 2001, though "we are not losing market share at all," said Mr Ellison.

"We are gaining market share in our primary database business."