Oracle Surpasses $10-Billion Mark In Quarterly Sales


Oracle recorded its first $10 billion quarter in its just-completed fourth quarter, the company reported Thursday, with sales of the company's software products showing impressive growth for the quarter and the entire fiscal year.

But nearly 18 months after acquiring Sun Microsystems Oracle is still looking for solid sales growth across its server and storage hardware products.

For the fourth quarter ended May 31 Oracle reported total revenue of $10.8 billion, up 13 percent from $9.5 billion in the same quarter last year. Net income for the quarter surged to $3.2 billion, up 36 percent from $2.4 billion last year.

For all of fiscal 2011 ended May 31 the company reported total revenue of $35.6 billion, up 33 percent from $26.8 billion in fiscal 2010. Net income for the fiscal year soared to $8.5 billion, up 39 percent from $6.1 billion last year.

Not surprisingly, Oracle's financial performance was strongest in its core software business. New software license revenue grew 19 percent in the fourth quarter to $3.7 billion, while software license updates and product support revenue increased 15 percent to $4.0 billion.

For all of fiscal 2011 new software license revenue grew 23 percent to $9.2 billion, while software license updates and product support revenue increased 13 percent to $14.8 billion.

"Our software business is now even bigger than IBM's software business," said co-president and CFO Safra Catz during a conference call with financial analysts Thursday.

Database and middleware software sales reached $5.4 billion in the fourth quarter while application sales were $2.3 billion. Database and middleware software sales were $16.6 billion for all of fiscal 2011 while application sales were just under $7.5 billion.

Sales of hardware system products, however, were down 6 percent in the fourth quarter to $1.2 billion. Hardware sales for all of fiscal 2011 were more than $6.9 billion: Oracle acquired Sun Microsystems and its hardware products in January 2010.

One analyst on the call noted that this was the second quarter where hardware revenue didn't meet expectations.

Oracle executives took the position that the volume of hardware sales is down because the company is focused more on selling higher priced, higher margin hardware products.

"I think we're just following the fundamentals of building a solid business," co-president Mark Hurd said on the analyst call. "We want to grow the top line right, and to grow the top line right, getting rid of those low-margin businesses is key." But Hurd acknowledged that eventually Oracle must begin to grow top-line hardware sales.

"Later this year I expect the growth of the Sun hardware products to become quite obvious," Catz said.

CEO Larry Ellison noted on the call that Oracle now has more than 1,000 of its high-end Exadata database servers installed. "And we plan on tripling that number this year," he said. And he added that early sales growth for the company's Exalogic Elastic Cloud server, unveiled late last year, has been faster than the Exadata system.

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