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Oracle profits rise but sales fall in Q1

Chris Kanaracus | Sept. 17, 2009
New software license revenue drops by 17 per cent

BOSTON, 16 SEPTEMBER 2009 - Oracle's first-quarter net income rose by 4 per cent year-over-year to US$1.1 billion, but revenue fell by 5 per cent to $5.1 billion, the company said Wednesday. Earnings per share were $0.22.

Excluding one-time charges, Oracle reported earnings per share of $0.30, partly meeting the expectations of analysts polled by Thomson Reuters, who had on average predicted earnings of $0.30 per share and $5.25 billion in revenue.

New software license sales fell 17 per cent year-over-year to $1 billion, indicating that customers are still reluctant to make new software investments amid the ongoing recession.

Oracle managed to increase profits even as revenue fell by "substantially improving" its operating margins, company President Safra Catz said in a statement.

Oracle's results were also bolstered by growth in revenue for software license updates and support, which jumped 6 percent to $3.1 billion. Associated expenses were just $226 million, meaning the profit margin for this part of Oracle's business was greater than 90 per cent.

Oracle blamed the dip in new license sales partly on weak business at other software vendors. "They sold less of their applications, and so they drive less database with them," Catz said in a conference call.

The earnings report comes a day after Oracle announced a new Exadata data warehousing and OLTP (online transaction processing) appliance jointly developed with Sun Microsystems.

Oracle announced plans to acquire Sun earlier this year, but the acquisition is being held up by an antitrust review by European authorities. Oracle executives offered no new details about the deal Wednesday, but said integration planning work is proceeding.

During the call, CEO Larry Ellison repeatedly targeted IBM, who Oracle will soon be battling in both software and hardware markets. The company is well-positioned to compete against IBM with its recently updated database and middleware products, he said.

Oracle shares were down $0.78 in after-hours trading to $21.35.


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