Oracle (ORCL ) released its fiscal third-quarter results last night. Net income was $1.3 billion or 26 cents a share with revenue of $5.3 billion or 30 cents a share excluding special items. That is increases of 30% in profits and 21% in revenue. These numbers matched analyst expectations. In addition, Oracle reaffirmed guidance in line with Wall Street’s expectations.

Oracle is a software titan and this level of growth is terrific. One may argue the merits and transparency of growth fueled by acquisitions versus primarily through organic but the results speak for themselves. The Street’s reaction was an 8% drop in Oracle’s stock in after-hours trading and a 5% drop in its rival SAP ( SAP ).

The reason for the drop in prices are the “miss” in the growth of new software licenses for business applications of 7% to $451 million versus analysts’ estimates as high as $550 million. The concern is that these licenses are the “canary in the coal mine” indicator of future growth and may be signaling recessionary pressures on IT spending in respect to Oracle’s business. Chief Financial Officer Safra Catz reinforced these anxieties when he stated "Customers got a little more cautious at the end of the quarter, given what was going on in the financial markets."

The Oracle bull case is that Oracle’s acquisitions strategy, its world-wide footprint, and its diversified software portfolio would shield it from a US-based recession or slowdown in IT spending. In addition, according to Goldman, Oracle derives “only” 13% of its revenue from financial-services market versus the 20% dependence that an average technology company. Clearly, this quarter, Oracle was able meet expectations and post impressive growth numbers (notwithstanding it being acquisition enhanced.)

The Oracle bear case is that none of the software titans are going to be except as the US recession or slowdown (that is another discussion) impacts IT spending. It is still an open question whether overall IT budgets are being reduced significantly or discretionary spending merely being delayed until companies get a better handle on this economic cycle.  Specific industries, such as financial services who are big IT spenders, are being hit hard. The stocks of IT outsourcers who are heavily dependent on financial-services have taken a beating. It would be wise to examine the exposure of any of your technology investments to the financial-services industry. This is not to discourage those investments but this due diligence should be at least a factor in your investment decisions.

Oracle’s results may be a good indicator of enterprise application sales to large customers but may not offer much insight into the SMB (small to medium size) market where, at least in the apps market, it is not a dominant player.

It would be naïve to assume any market segment, including business intelligence (BI) and data warehousing (DW) is except from reductions in IT spending, however, it would be equally simplistic to assume all IT spending is going to be reduced across-the-board, across all industries and across all sizes of enterprises. BI and DW projects have been rated in the top three priorities in IT spending surveys for the last few years. These projects, although not exempt from being reduced or postponed, are more likely to move forward because of their business ROI compared to other projects.

The canary appears to be fine for now based on Oracle’s results, but the reason we have them in the mine is to indicate immediate danger. Trouble may be growing, and it may appropriate to be cautious, but the canary has not dropped yet.

Disclaimer: No canaries were harmed in writing this post.