Oracle earnings up on strengthening market

Oracle earnings up on strengthening market

Citing a strengthened competitive position and an improving economy, Oracle reported fiscal second-quarter results on Monday that exceeded its own guidance and hit the upper end of Wall Street expectations.

Net income at Oracle for the three months ending Nov. 30 amounted to US$617 million, or $0.12 per share, compared with $535 million, or $0.10 per share, in the year-earlier period, the Redwood Shores, California-based software vendor said in a statement.

Revenue for the period was $2.5 billion, up 8 percent from $2.3 billion a year earlier, Oracle said. The company in September had forecast revenue growth between 2 percent and 5 percent and earnings per share of $0.10 or $0.11.

Analysts had expected Oracle to report between $0.10 and $0.12 in second-quarter earnings per share, on revenue of between $2.3 billion and $2.6 billion, with the consensus estimates being $0.11 in earnings per share on revenue of $2.4 billion, according to Thomson First Call.

With all major software product categories and all geographic regions posting growth, Oracle reported new software license sales up 13 percent to $849 million and license update and product support revenue up 17 percent to $1.1 billion. The company had forecast new license revenue to be between 3 percent lower and 7 percent higher than last year.

Sales were especially strong in North America, where they bounced back from a dip in the previous quarter as a result of a sales force overhaul, Oracle executives said in a conference call.

North America showed the strongest revenue growth but was not alone, Chief Financial Officer Jeff Henley said on the call.

"We are seeing signs of improvement in Europe, which is the weakest performer right now," Henley said. "We area extremely pleased with the strong performance we saw in the quarter and look forward to even stronger performance in the future."

For its third quarter, Oracle expects new license revenue to be up between 5 percent and 15 percent, overall revenue to increase between 7 percent and 10 percent and earnings per share to be $0.11 or $0.12, Henley said. The company again expects growth in all areas of the world, he said.

Oracle expects to benefit from customers buying its new 10g line of products. The application server was released last week and the database and management tools should be available by the end of the year. In January, Oracle plans to release JDeveloper 10g, a new version of its application development environment.

"We are expecting a bit of a pop for 10g," said Oracle Chief Executive Officer Larry Ellison on the conference call. He expects software buyers to pick Oracle and for current customers to upgrade because of grid technology included in the 10g products, which allows customers to run Oracle software on a grid of inexpensive computers. That means better performance and reliability with a lower cost of ownership, according to Ellison.

Oracle executives did not discuss the company's ongoing takeover bid for PeopleSoft during the call.

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