Evening Update: Solid Oracle Earnings Get Thumbs-Up After Hours
By Heather Moore and Medora Lee
Staff Reporters
12/10/98 8:08 PM ET
Oracle (ORCL:Nasdaq) relieved many analysts with a much-stronger-than-expected second-quarter performance.
Oracle posted a solid 46% year-over-year profit rise in the quarter ended Nov. 30 to boost earnings to 28 cents a diluted share, 4 cents above the 26-analyst First Call estimate and up from the year-ago 19 cents. But analysts were more impressed with the details. Oracle's core database server license revenue rose 26% from a year ago while applications license revenues, which had been flat for the past couple of quarters, jumped 19%. In the past four quarters, database products made up 73% of Oracle's sales, with applications making up the rest.
Though analysts were generally pleased with the results, Tom Hensel, an analyst at Everen Securities, noted that year-over-year comparisons were also much easier after dismal results last year. Hensel's firm has not underwritten for Oracle.
In a conference call, Oracle CFO Jeff Henley attributed much of the strength in applications to a 31% rise in the Americas region. He predicted that Europe, which received Oracle's Release 11 software for businesses later in the summer than the Americas did, will prop up applications growth in the third quarter.
However, he noted "very, very aggressive" pricing competition from SAP (SAP:NYSE) that some analysts say should be watched.
"With SAP, the question they will want to own this market at all costs," Hensel said. But he says Oracle is so big that as long as the company stays on track, it should be able to survive the price war. After today's earnings, Hensel said, he is considering raising his estimates for Oracle.
Oracle initially rose 1 9/16 to 36 1/2 in after-hours trading but later retreated to 35 1/2.
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