Oracle Reports Quarterly Profit That Beats Analysts' Expectations

The Redwood Shores, Calif.-based technology bellwether earned $655.9 million, or 12 cents per share, for the three months ended May 31. That represented a 23 percent decline from net income of $854.9 million, or 15 cents per share, at the same time last year.

Oracle says its earnings per share in the latest quarter would have been 14 cents per share if not for a $173.5 million charge to account for the diminished value of its 32 percent stake in another software maker, Liberate Technologies. On that basis, the results exceeded the consensus estimate of 12 cents per share among analysts surveyed by Thomson Financial/First Call.

The pleasant surprise cheered investors who had been worried that Oracle's yearlong sales slump would produce an earnings disappointment.

Oracle's shares fell 27 cents to close at $8.93 on the Nasdaq Stock Market before the earnings announcement. After Oracle released its results, the shares surged $1, or 11 percent, in extended trading.

The good news on the profit front overshadowed more bad news in Oracle's sales pipeline. The company's new software sales plunged 29 percent from the prior year to $1.17 billion. Oracle's overall revenue in the quarter totaled $2.77 billion, a 16 percent decrease from last year.

Oracle softened the sales blow by pruning its expenses, largely by paying fewer bonuses and curtailing corporate travel. The company shaved 28 percent from its sales and marketing costs and shaved another 24 percent from its cost of services.

"We have done a significant job of expense restraint and control, but there is only so much we can do," Jeff Henley, Oracle's CFO, told a group of reporters Tuesday.

The company didn't make significant layoffs in the quarter nor does it plan any immediate job cuts, Henley says, contradicting the recent predictions of several industry analysts.

Oracle had 42,006 employees as of May 31, up slightly from the 41,935 workers on the payroll at the end of the prior quarter. The company's work force is about 3 percent smaller than it was at its peak during the dot-com boom.

The company is operating assumption that business spending on technology won't pick up significantly until early 2003.

"It is difficult to say when we will see an improvement," Henley says. "So far, it has been very sluggish."

For its full fiscal year ended in May, Oracle earned $2.22 billion, or 39 cents per share, on revenue of $9.67 million. That was down from a profit of $2.56 billion, or 44 cents per share, on revenue of $10.96 billion in the prior year.

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