Oracle Top Dogs Bullish On Looming Apps, Database Battles

For the upcoming first fiscal year 2006 quarter, Oracle expects earnings to grow 33 percent to 36 percent to 14 cents per share, said Oracle Co-President Safra Catz. For the full fiscal year, the company expects to earn 78 cents to 81 cents per share, Catz told analysts on Oracle's fourth-quarter earnings call Wednesday morning. Earnings for the just-ended fiscal year were $2.89 billion, or 56 cents per share, up 8 percent from $2.68 billion, or 51 cents per share.

For its fourth fiscal quarter ending May 31, Oracle posted earnings of 20 cents per share on sales of slightly more than $1 billion under GAAP guidelines, compared with $990 million, or 19 cents per share, last year. Profits, which rose 3.2 percent, exceeded expectations due to robust database sales.

Total software revenue was up 24 percent to $3.88 billion under GAAP. Pro forma revenue, excluding charges, was up 32 percent to $4.06 billion for the quarter, according to the Redwood Shores, Calif.-based company.

This is the first full quarter since Oracle completed its controversial $10.6 billion buyout of applications rival PeopleSoft.

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Now Oracle CEO Larry Ellison et al are turning their guns on SAP, the ERP kingpin.

Co-President Charles Phillips claimed several Oracle apps "wins" over SAP, including Citicorp, Hitachi, Canon, Symantec, the Royal Bank of Scotland, American Power Conversion, Alcoa, Starbucks, the state of Ohio, Best Buy, Ricoh and Motorola.

"The PeopleSoft integration is complete--the development and sales organizations are integrated and delivering upgrades to PeopleSoft and J.D. Edwards customers. The retention rate is in the high 90th percentile," Catz said.

Oracle and SAP, Walldorf, Germany, have been trying to one-up each other in winning customers. SAP launched its latest Oracle migration program this week.

But Oracle is in a multifront war. It's fighting BEA Systems and IBM in application servers and middleware, IBM and Microsoft in databases and middleware.

Ellison said he is "very, very pleased" with the app server business, which has grown faster than the company's bread-and-butter database business, albeit from a smaller base. "We're up 30 percent for several quarters, while BEA again is in decline," he noted.

Skeptics say Oracle basically gives away its middleware in database and other deals.

In other highlights, Catz said Oracle's database business was up 16 percent in the fourth quarter, applications up 52 percent.

Oracle has bolstered top management for this effort, recently hiring Microsoft veteran Greg Maffei as CFO and as yet another co-president. That move raised eyebrows. "Having three co-presidents is idiotic [but] Greg brings a lot of competence and experience in a big, fast-growing software company. Given that Oracle must integrate PeopleSoft and ReTek quickly and switch a lot of internal processes to use the PeopleSoft development and support models, Larry needs someone who can look at things from a fresh point of view and tell the story to the street in a convincing way," said one large integration partner.

Oracle also brought aboard Tod Nielsen, a former BEA and Microsoft executive, to help lead its middleware charge and Eileen McPartland, a former Siebel Systems and Accenture executive, to head North America consulting.