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TMCNet:  Oracle's revenues and profits up, but by less than expected

[December 21, 2011]

Oracle's revenues and profits up, but by less than expected

Dec 20, 2011 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) -- Oracle (ORCL) reported Tuesday that revenue and profit both increased during its most recent fiscal quarter, but the company fell short of its own forecasts and the expectations of Wall Street analysts.

The software giant said it had sales of $8.8 billion in the quarter ending Nov. 30, up 2 percent from a year earlier, while net income rose 17 percent to $2.2 billion. Earnings amounted to 43 cents a share, or 54 cents after excluding one-time charges.

Analysts polled by Thomson Reuters had predicted, on average, that Oracle would report earnings of 45 cents a share, or 57 cents a share after excluding one-time charges, on revenue of $9.23 billion.

The company fell short of its own forecast in several areas. It reported a 2 percent increase in revenue from new software licenses, which are a key indicator of future revenue from lucrative maintenance contracts. Oracle had previously forecast that new licenses would increase by 6 to 16 percent.

Hardware sales were down 14 percent, which is worse than the 5 percent decline that Oracle had previously forecast.

Oracle's performance is often viewed as a bellwether for the commercial software industry as a whole: The Redwood City company is the world's biggest seller of database programs and is also a leading supplier of other kinds of software that businesses and government agencies use to run their operations.

And since its fiscal quarter ends several weeks later than most of its competitors, analysts look to Oracle's results for the most current view of overall tech spending.

Oracle's earnings represent "a first glance" of the potential impact that November's European economic upheaval could have on global software purchases, "not just with Oracle but also the broader industry," Barclays Capital analyst Raimo Lenschow said in a note to investors last week.

The company has shown few effects of the rocky economy in recent quarters. It's reported steady growth in software revenue, although its hardware sales were down for the last two successive quarters.

Oracle has been overhauling the computer hardware business that it acquired by buying Sun Microsystems last year. But it has continued to lose market share in that business to competitors such as IBM, Hewlett-Packard (HPQ) and Dell.

CEO Larry Ellison also has been expanding Oracle's offerings of so-called "cloud computing" services, including software that Oracle stores in its own data centers and delivers to customers over the Internet. He announced a deal to buy the cloud-computing company RightNow for $1.4 billion in October, just weeks before rivals IBM and SAP announced cloud-computing acquisitions of their own.

Oracle's stock closed Tuesday at $29.17, up nearly 2 percent for the day. The stock fell more than 6 percent in late trading after the company released its earnings report.

Contact Brandon Bailey at 408-920-5022; follow him at ___ (c)2011 the San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at Distributed by MCT Information Services

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