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Oracle profit slumps, but tops Wall Street views
Oracle profit slumps, but tops Wall Street viewsCurrency exchange rates cited for decline; new license sales dip
SAN FRANCISCO (MarketWatch) -- Oracle Corp. said Tuesday its quarterly profit dipped 7%, as the business-software company suffered from declining sales of new licenses in what is typically its strongest period of the year.
Oracle's results, however, came in slightly ahead of Wall Street's estimates, and it issued better-than-expected guidance. Oracle shares rose more than 2% in after-hours trading following the report.
Redwood Shores, Calif.-based Oracle said net income for the fourth quarter ended in May fell to $1.9 billion, or 38 cents a share, from $2 billion, or 39 cents a share, in the comparable period a year earlier. Revenue fell 5% to $6.9 billion, Oracle said.
Excluding special items, earnings were 46 cents a share. Analysts had forecast an adjusted profit of 44 cents a share and $6.5 billion in revenue, according to a Thomson Reuters survey.
Oracle said that sales of new software licenses fell 13% to $2.7 billion.
New software-license revenue, which is closely watched because it tracks new sales to customers rather than providing maintenance for existing software, was expected to fall about 24%.
Patrick Walravens, an analyst who covers Oracle for JMP Securities, called the new license sales result "a pleasant surprise."
"Oracle tends to have very good fourth quarters," Walravens said, though he added that it's unlikely other companies in the industry fared quite as well during the period.
Oracle, which does a significant amount of business overseas, cited the impact of weakened foreign currencies compared to the U.S. dollar on its results. If that impact had been removed, Oracle said, earnings would have increased 9%.
"We have a lot of company-specific momentum," Oracle President Safra Catz said during a conference call with analysts, "We've exceeded our own expectations quarter after quarter."
For its current, first fiscal quarter, Oracle said that excluding the effects of currency fluctuations it expects sales of new software licenses to range between a 10% decline and flat compared to the period last year.
Excluding special items, Oracle said it expects first-quarter earnings excluding special items to be between 31 and 33 cents a share. Analysts have been anticipating first-quarter earnings excluding special items of 30 cents a share, according to Thomson Reuters.
Support sales provide a cushion Revenue from product-license updates and support rose 8% to $3.1 billion in the fourth quarter, Oracle said. The business of maintaining software already sold to existing customers has served as something of a cushion for Oracle during the economic downturn.
In some instances businesses have the option to go to lower-cost, third party maintenance providers, but most Oracle customers are compelled to pay a certain percentage of the software's license fee on a regular basis for upkeep.
Oracle said that due in part to its recurring revenue from support, it managed its highest quarterly operating margin since the company went public.
"The margin story really has to do with the fact we have an enormous installed base of customers," Catz said, adding that the company has not scaled back significantly on spending.
Catz said the company is now pouring "up to $3 billion dollars a year into [research and development] alone," adding, "We are not a cost-cutting story."
However, one foreseeable impact on Oracle's margins should be the company's $5.6 billion acquisition of Sun Microsystems Inc., which it expects to close during the current quarter.
"The Sun acquisition will change the margin story for a while, but it will improve over time," Catz said. Though some have speculated that Oracle may want to shed Sun's hardware business in the future, Oracle Chief Executive Larry Ellison suggested during the conference call that hardware is a key part of the company's strategy.
The Sun acquisition provides a chance "to get down into the hardware" portion of the technology platform offered to corporate customers, Ellison said.
Other highlights from the fourth quarter for Oracle included relatively strong sales in Europe, where the company's applications business grew 5%. Oracle noted that Europe has traditionally been a "stronghold" of German rival SAP AG.
Walravens added that Oracle's database and middleware software business also showed impressive results for the quarter, falling only slightly on a constant currency basis.
"Having your technology down only 1% in this environment is quite a feat," Walravens said.
Ellison also touted the company's progress in "on-demand" software provided from a central data center via the Internet. Though a relatively new model pioneered by smaller companies such as Salesforce.com Inc. , Ellison said Oracle will see a "very gradual shift over the period of a decade" toward more on-demand offerings.
For example, the CEO noted that Oracle's "Fusion applications" to be unveiled later this year are all "on-demand ready." |
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游客 发表于 2009-7-15 20:52