Oracle Q1 Revenue Slips, Hardware Sales Take Plunge


Oracle announced Thursday a drop in its first-quarter fiscal revenue, reporting software sales that were strong but not strong enough to offset the continual decline of its hardware business.

Quarterly revenue slipped 2 percent year on year to $8.2 billion, Oracle said, though its net income saw an 11 percent jump to $2 billion.

Revenue for Oracle's hardware systems products group plummeted 24 percent compared to the same period last year, pulling in $779 million for the quarter. Sales in Oracle's hardware systems support unit fell 11 percent year on year to $574 million, and total hardware systems revenue slipped 19 percent to $1.4 billion.

[Related: Oracle: We'll Continue Software Development For HP Itanium Servers]

Despite reporting similarly bleak hardware sales last quarter, Oracle said sales for its Exadata, Exalogic and Exalytics servers -- products the company refers to as its "engineered systems" -- grew more than 100 percent during its first quarter. For the full year, Oracle projects engineered system sales will double to pull in "well over" $1 billion.

"Where we release new products, we see growth, and we drive share," said Oracle President Mark Hurd, during a conference call Thursday with investors.

Oracle CFO Safra Catz assured analysts and investors that the company will start seeing the same operating margins it saw in its "pre-hardware" days, or prior to its 2010 acquisition of Sun Microsystems, "very soon."

Meanwhile, Oracle's software licenses and cloud software subscription revenues grew 5 percent during its first quarter, accounting for $1.6 billion. Software license updates and product support revenues were also up, rising 3 percent year on year to $4.1 billion. Software revenue in total jumped 4 percent compared to the same period last quarter, accounting for $5.7 billion.

Oracle's first-quarter earnings results fall just one week before the tech giant will host its annual OpenWorld event in San Francisco. Oracle said more announcements related to Oracle Cloud, along with new CRM, ERP and HCM applications as a service can be expected. Updates related to Oracle's Java and social network platform services will also be revealed at the event.

PUBLISHED SEPT. 20, 2012