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Oracle 2nd-Qtr Net Rises 62%; Applications Sales Jump (Update1)
By Jim Finkle
Redwood City, California, Dec. 14 (Bloomberg) -- Oracle Corp., the world's No. 2
independent computer-software maker, said fiscal second-quarter earnings rose
62 percent, buoyed by sales of a new Internet-friendly suite of business
programs.
Net income for the quarter ended Nov. 30 rose to $622.8 million, or 11 cents a
share, from $384.5 million, or 6 cents, a year earlier. Sales jumped 15 percent to
$2.66 billion from $2.32 billion.
Oracle, run by billionaire Larry Ellison, posted the better- than-expected results
about 15 minutes before archrival Microsoft Corp., the No. 1 software maker, said
sales and earnings will fall short of forecasts in the December quarter because of
a slowdown in the personal-computer market.
Intel Corp., Compaq Computer Corp. and Gateway Inc. have also said results will
suffer. Oracle Chief Financial Officer Jeffrey Henley said he doesn't see the
slump affecting his company's revenue because Oracle sells mostly to
businesses seeking to use the Internet to cut costs and boost efficiency.
``The economy is slowing,'' Henley said in an interview. ``It's just not having a
negative impact on our business.''
Oracle shares fell 88 cents to $27.50 before the report today. They rose as high
as $28.38 after the release, then dropped back to $27.25. Microsoft fell $1.75 to
$55.50 in regular trading, then declined to $52.63 after the company reduced its
forecast.
Sales of the new Web-based Oracle 11i software suite totaled $279 million for
the quarter, jumping 66 percent from year-earlier applications sales. Sales of
Oracle's database software, the company's best-selling product, rose 19 percent
to $775 million.
Corporations are spending heavily to become ``e-businesses,'' or companies that
use the Internet as much as possible to make their operations and computer
networks more efficient, Henley said.
``If they have to slow down on discretionary spending, it's not going to be on
e-business,'' Henley said.
Oracle 11i
Oracle's second-quarter profit beat the average forecast of analysts surveyed by
First Call/Thomson Financial by a penny.
Investors were watching for signs that Oracle 11i, introduced in May, has taken
off with customers. Ellison has been pushing the package to companies looking
to automate business tasks using the Web. Sales of Oracle 11i, which
competes with products from Siebel Systems Inc. and SAP AG, disappointed
investors in the quarter ended Aug. 31.
Alan Loewenstein, assistant portfolio manager of the John Hancock Technology
Fund, said that the results looked positive at first glance. Investors are likely to
ask about the outlook for database sales, because some may consider 19
percent growth to be ``a disappointment,'' he said.
Henley said he expects sales growth of Oracle 11i to accelerate in the third
quarter, enabling the company to meet its full-year applications sales growth
target of 50 percent to 100 percent.
``Hopefully we've got a shot to be at the high end of that range,'' he said. ``The
pipeline looks outstanding.''
Profit Forecasts
Henley said he expects the company to report earnings of 12 cents a share in
the third quarter, in line with the average analyst forecast from First Call, and 20
cents in the fourth quarter, or a penny above the First Call estimate.
Henley said he's not concerned that growth in sales of database software slowed
to 19 percent in the second quarter. That's less than the 32 percent increase in
the quarter ended Aug. 31.
He blamed the slower growth on the weakness of the euro, which reduces the
value of sales in many European countries when they're converted into U.S.
dollars.
``This euro thing is really severe,'' he said. ``This is a normal growth rate when
you consider it in terms of local currency growth.'' |
