Good News, Bad News: Oracle Ups Profits As New License Revenues Droop

The company earned $440 million or eight cents per share for the period ended August 31, up from $343 million or six cents per share for the year-ago period.

Most analysts had expected the company to hit the eight-cent figure, but were hoping to see new license sales perk up for the quarter.

In a call with analysts early Friday, CFO Jeff Henley said he does not expect immediate improvement in new license sales. He expects revenue to rise between two and five percent for the second quarter.

The news comes a day after the close of the annual OracleWorld show in San Francisco, where Oracle execs from chairman Larry Ellison on down touted the company's upcoming 10g database and application server lineup. Those products are due to ship by the end of this year and promise to scale up to huge workloads.

At the show, Ellison said 10g will boost performance for the biggest workloads. Where the current Oracle 9i scale for two, four or maybe eight servers, the next-generation release will take advantage of a "grid" of 64- to 128-inexpensive Linux/Intel servers, Ellison said at the show.

Oracle is under intense price pressure in its key database market however and Ellison said Tuesday the company will unveil new pricing next week. The current Enterprise Edition costs $40,000 per CPU and the lower-end Standard Edition is $15,000 per CPU. Real Application Cluster (RAC) capability costs an additional $10,000 per CPU, a price that Ellison hinted would be cut. At the show he said the company will make the transition for customers to RAC as graceful and easy as possible. (Click here for more on 10g.)

Oracle also continues its quest to buy out PeopleSoft for $7.3 billion and extended its tender offer till mid October.