Oracle Q3 Net Income Rises 78 Percent

Oracle's net income for the third quarter ended Feb. 28 rose 78 percent to US$2.1 billion over the same period last year, helped by strong software sales and an improving hardware business, the company said Thursday. Revenue for the quarter jumped 37 percent to $8.8 billion.

By Chris Kanaracus
Thu, March 24, 2011

IDG News Service — Oracle's (ORCL) net income for the third quarter ended Feb. 28 rose 78 percent to US$2.1 billion over the same period last year, helped by strong software sales and an improving hardware business, the company said Thursday. Revenue for the quarter jumped 37 percent to $8.8 billion.

Revenue from new software license sales, which provide a key insight into a vendor's growth and how customers are feeling about IT spending, rose 29 percent to $2.2 billion year over year.

Software license updates and product support revenues, which provide steady income even as new license sales slow, rose 13 percent to $3.7 billion.

Hardware systems sales were $1 billion, down slightly from the second quarter's total of $1.1 billion. No comparison to the same quarter last year could be made, as Oracle only completed its purchase of Sun Microsystems on Jan. 27, 2010.

However, Oracle's "hardware product gross margins increased to 55 percent in the quarter so we are now completely confident that we will exceed the $1.5 billion profit goal we set for the overall Sun business for the current fiscal year," co-President Safra Catz said in a statement.

All geographic regions had revenue growth of 30 percent or more, with strong sales for the Exadata and Exalogic appliances, co-President Mark Hurd said in a statement.

Oracle also signed a number of large deals "with some of the biggest names in cloud computing," including Salesforce.com, CEO Larry Ellison said in a statement.

"Salesforce.com's new multi-year contract enables them to continue building virtually all of their cloud services on top of the Oracle database and Oracle middleware," he added.

With the purchase of Sun Microsystems, Oracle has embarked on a strategy to sell customers on integrated systems spanning hardware and software, a la the IBM (IBM) of old.

Oracle has been aggressively going after IBM as well as Hewlett-Packard (HPQ), with the latest salvo being its decision, announced this week, to stop developing software for Intel's Itanium chips. HP's Integrity servers are based on Itanium processors.

The company of late is feeling its oats down to the salesperson level, one expert said in an interview Thursday, prior to the results' release.

Oracle has been "reacting in a lot more confident way when it comes to pricing and proposals to clients," said Eliot Arlo Colon, president of Miro Consulting, a Woodbridge, New Jersey, firm that helps companies negotiate licensing agreements with the vendor. "Clients who are waiting and holding out for a better deal are finding that next offer is no better, or a little worse."

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