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A change in sales strategy is behind a drop-off in revenues, but Mark Hurd says it's all in service of more profit down the line.

FORTUNE -- Mark Hurd may have an impressive track record selling hardware for his former employer, Hewlett-Packard (HPQ). But that hasn't translated to immediate success at Oracle Corporation (ORCL), where Hurd now serves as president. The Redwood Shores, Calif.-based company's hardware business fell short of expectations in an otherwise strong quarter, announced earlier this week. The disappointing news sent Oracle shares down in late trading on Thursday.

According to Hurd, the reason for the decline in hardware product revenues is that Oracle is deliberately selling fewer systems at a higher price.

"Selling units that have no gross margin are easy to do," Hurd told investors on a conference call Thursday afternoon. Oracle's focus, Hurd added, is selling higher-margin machines. More