Oracle Hits $4 Billion In Quarterly Software Sales, But Hardware Sales Lag


In a surprise move Monday, Oracle announced its fiscal 2012 fourth-quarter and full-year financial results three days early, possibly in an effort to counter reports that the giant IT company is planning a corporate reorganization.

Company executives, oddly, didn't say on an earnings call with financial analysts why the earnings announcement was moved up. They also didn't make any comments addressing reports that North America sales executive Keith Block is being dismissed from the company.

Instead CEO Larry Ellison, co-presidents Mark Hurd and CFO Safra Catz painted a generally upbeat portrait of the company. "Obviously, we couldn't be happier with our Q4 results," Catz said early in the call.

[Related: Report: Oracle North America Sales Executive Dismissed]

For the fourth quarter ended May 31, Oracle reported total revenue of $10.9 billion, up 1 percent from $10.8 billion in the same period one year ago. Net income was $3.5 billion, up 8 percent from $3.2 billion last year.

New software license sales in the quarter were up 7 percent to $4 billion, while revenue from software license updates and product support grew 5 percent during the quarter to $4.2 billion. Total software revenue for the quarter was up 6 percent to $8.1 billion.

"We sold $4 billion in software for the first time ever," Ellison said on the call. "And this growth comes off double-digit comparisons over the last two years." He noted that the company recorded solid sales growth in application, database and middleware software, as well as applications for vertical industries such as healthcare, retail and financial services.

But sales of hardware system products plunged 16 percent in the fourth quarter to $977 million while hardware systems support revenue dropped 11 percent to $600 million. Total hardware systems revenue was down 14 percent in the quarter to $1.6 billion.

The Oracle executives noted that hardware revenue exceeded earlier guidance, and Hurd said sales of "engineered systems" -- Oracle's term for its Exadata, Exalogic, Exalytics, SPARC SuperCluster and Oracle Big Data Appliance servers -- doubled year-over-year in the fourth quarter. And expectations for the current fiscal year remain high: "We are forecasting a big 2013 in engineered systems," Hurd said.

Ellison also repeated a pledge he made on Oracle's third-quarter earnings call that the company's hardware business will turn profitable in fiscal 2013.

For all of fiscal 2012 ended May 31, Oracle reported total revenue of $37.1 billion, up 4 percent from fiscal 2011. Net income for the year was $10.0 billion, up 17 percent from $8.5 billion in fiscal 2011.

New software license sales in fiscal 2012 were up 7 percent to $9.9 billion while revenue from software license updates and product support grew 10 percent during the quarter to $16.2 billion. Total software revenue for the quarter was up 9 percent to $26.1 billion.

Sales of hardware systems products in fiscal 2012 dropped 1 percent to $3.8 billion while hardware systems support revenue dropped 3 percent to $2.5 billion. Total hardware systems revenue for the year was down 9 percent to $6.3 billion.