Oracle Tops Wall Street Earnings Estimates

by David Needle

Software sales lead the way in the computer giant's second quarter earnings release.

Oracle (NASDAQ: ORCL) reported a bang up second quarter, beating Wall Street profit estimates. The enterprise software and hardware company reported software license updates and product revenues grew 12 percent in the quarter to $3.7 billion, and new software license revenues were up 21 percent to $2 billion.

The company's net income (non-GAAP) rose 34 percent to $2.6 billion, while earnings per share rose 33 percent to $.051. Total revenues were up 47 percent to $8.6 billion.

Overall, Oracle reported second-quarter profit, excluding items, of 51 cents per share. That beat the average analyst forecast reported by Thomson Reuters of 46 cents.

After the earnings report, Oracle's shares rose 3.4 percent to $31.30 after closing at $30.27.

"Our new license growth of 21 percent demonstrates the strength of the company-specific momentum we are seeing," Oracle president Safra Catz said in a statement. "And our Sun business continues to improve with hardware gross margins increasing to 53 percent."

Mark Hurd, Oracle's new co-President, was bullish on the company's hardware sales. "Since joining Oracle I've met with and visited many customers that have expressed a high level of enthusiasm around our strategy of engineering hardware and software that works together," said Hurd. "That enthusiasm translates into an Exadata pipeline that has now grown to nearly $2 billion. That number is a good leading indicator that customers are planning to increase their investment in Oracle technology."

While its core software business continues to lead the way in terms of profits, Oracle is banking on growth from its new systems strategy that is based on technology and hardware it gained as part of its acquisition of Sun Microsystems.

"Sun's new SPARC Supercluster computer shattered the world record for database transaction processing performance by running 3 times faster than IBM's fastest computer, and a stunning 7.5 times faster than HP's best ever database performance," said Oracle CEO Larry Ellison. "Our new generation of Exadata, Exalogic and SPARC Supercluster computers deliver much better performance and much lower cost than the fastest machines from IBM and HP."

On the company's conference call, Oracle CEO Larry Ellison and President Safra Catz trumpeted the company's applications and data warehousing business while taking shots at rivals SAP (NYSE: SAP), HP (NYSE: HPQ), Salesforce.com (NYSE: CRM) and Workday.

Oracle also issued a strong financial outlook. Its shares were up 4 percent in after-hours trading.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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  This article was originally published on Friday Dec 17th 2010
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