Friday, March 25, 2011

Oracle fiscal 3Q net income up 78 pct

Database software maker Oracle Corp. said Thursday its net income rose 78 percent in the fiscal third quarter, helped by a rise in new software license sales and the benefit of three full months of revenue from Sun Microsystems, a company it acquired last year.

Oracle also issued earnings guidance for the current quarter that is higher than Wall Street expected. Shares climbed in extended trading.

The strong performance by Oracle is further testament to the recovery in business spending on technology. It is also a sign that the acquisition of Sun Microsystems, which turned Oracle into more of a one-stop shop by adding server computers to its software and consulting services lineup, is humming right along.

Oracle, which makes database software that underpins everyday transactions, from bank withdrawals to airline reservations, said new software license sales, a key figure for measuring Oracle's growth, increased almost 30 percent to $2.2 billion, above its own forecast for a 10 percent to 20 percent improvement.

Hardware systems revenue more than tripled to $1.7 billion from $458 million in the year-ago quarter. Oracle's $7.3 billion acquisition of Sun Microsystems, a server computer company, closed last January, so last year's quarter only included one month of revenue from Sun. This year's quarter included three months of Sun revenue.

It "was just a great quarter," said Mark Hurd, a president at Oracle.

Hurd, the former Hewlett-Packard Co. CEO who joined Oracle after his ouster last year in a sexual harassment scandal, took the place of Oracle's bombastic chief Larry Ellison, who could not join a conference call because he is serving jury duty.

Net income for the quarter that ended on Feb. 28 increased to $2.1 billion, or 41 cents per share, from $1.2 billion, or 23 cents per share a year earlier.

Excluding certain items, Oracle earned 54 cents per share, more than Wall Street was expecting. Analysts surveyed by FactSet forecast earnings of 50 cents per share.

Selling more Sun hardware and less third-party hardware helped Oracle improve profits in the quarter, as did improvements to the hardware supply chain, the company said.

Revenue jumped 37 percent to $8.8 billion from $6.4 billion, more than the $8.7 billion analysts predicted. The company said revenue increased more than 30 percent in every region worldwide.

Oracle said it expects fourth-quarter revenue to grow 10 percent to 14 percent, which comes out to $10.5 billion to $10.8 billion. Analysts currently predict $10.5 billion.

The company forecast earnings of 69 cents to 73 cents. Analysts forecast fourth-quarter earnings of 66 cents per share.

Oracle said it expects new software license revenue to grow 9 percent to 19 percent.

The Redwood Shores, Calif.-based company also said Thursday that employees in Japan are safe after the earthquake and tsunami, and that its Tokyo building was not damaged. Safra Catz, an Oracle president, said during a conference call that she does not expect problems with the supply chain as a result of the recent disasters.

Shares of Oracle bounced up $1.09, or 3.4 percent, to $33.20 in after-hours trading following the release of the earnings report. Earlier, the stock added 73 cents, or 2.3 percent, to close the regular session at $32.14.

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