Oracle Reports 3.2% Earnings Gain
Oracle Corp., the world’s third-largest software maker, said fiscal fourth-quarter earnings increased 3.2%, bolstered by rising demand in North America and Chief Executive Larry Ellison’s $11.2-billion acquisition spree.
Net income rose to $1.02 billion, or 20 cents a share, from $990 million, or 19 cents, a year earlier. Sales rose 26% to $3.88 billion in the period ended May 31, Redwood City, Calif.-based Oracle said.
The better-than-expected results helped allay concerns that Oracle was too dependent on acquisitions such as the $10.6-billion purchase of PeopleSoft Inc. for growth. North American sales of database software and business applications such as payroll programs posted their fastest growth in at least two years, helping new software sales beat analysts’ estimates.
“New software license revenue is certainly much stronger than most people expected, and that’s clearly a sign that it’s just more than acquisition revenue,” said Jim Shepherd, an analyst at AMR Research in Boston. “We are beginning to see organic growth as well from existing products.”
“We’re seeing strength across the board in all our businesses,” Ellison said. “We’re in a positive product cycle.”
Oracle is winning database customers from Microsoft Corp. and IBM Corp., the world’s top two software makers. In other applications, Ellison said gains with banking, engineering, healthcare and education clients showed that Oracle was taking orders away from market leader SAP.
Excluding $333 million in expenses for the purchases, profit would have been 26 cents, beating the 23-cent average estimate of analysts surveyed by Thomson First Call.
Oracle estimated that fiscal first-quarter profit would be 14 cents a share, matching the average analyst estimate. Total sales will increase to $2.92 billion to $2.98 billion, the company said. Analysts expected $2.94 billion.
The company raised its 2006 profit forecast to 78 cents to 81 cents a share, compared with a 78-cent analyst projection. Sales will be $14.2 billion to $14.4 billion. Analysts expect $14.2 billion.
Shares of Oracle gained 74 cents, or 5.8%, to $13.57.
