Oracle Reports Solid Q4 Sales Gains In Applications, Database Software

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For all of fiscal 2008, Redwood Shores, Calif.-based Oracle reported net income of $5.5 billion -- up 29 percent from 2007 " on a 25 percent increase in revenue to $22.4 billion.

"We like our strategy and we like our ability to execute," CEO Larry Ellison said in a conference call with Wall Street analysts, outlining Oracle's goals of beating rivals as Microsoft and SAP. President Charles Phillips noted that a report out this week from International Data Corp. said Oracle had increased its share of the $18.8 billion worldwide relational database market to 44.3 percent, keeping it ahead of IBM and Microsoft.

While Oracle reported healthy revenue growth for its third quarter ended Feb. 29, growth in application sales slowed significantly in the U.S. That set off warning bells among industry analysts who questioned whether the company was feeling the effects of the sluggish economy and customers were delaying application purchases. Oracle executives at the time said the dip was due to a few major deals slipping over to the fourth quarter and not an indication of a long-term trend.

For the fourth quarter total software revenue increased 26 percent to $6.0 billion. New software license revenue, a key growth indicator, was up 27 percent overall to $3.1 billion, fueled by a 36 percent increase in new license revenue for applications and a 23 percent increase in new license revenue for database and middleware products.

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Middleware vendor BEA Systems, which Oracle acquired April 29 for $6.7 billion, contributed $93 million in new software license revenue in the quarter, said president and CFO Safra Catz.

In the fourth quarter software license updates and product support revenue grew 25 percent to $2.8 billion. Services revenue increased 18 percent to $1.3 billion.

For all of fiscal 2008, Oracle reported new software license revenue increased 28 percent to $7.5 billion. Database and middleware new license sales increased 24 percent and application new license revenue increased 38 percent.

Looking ahead, Phillips said the company's sales pipeline remains full. "There are definitely large deals out there," he said, speaking specifically of application sales. But he acknowledged that big deals can take longer to close.

For the current quarter Oracle expects revenue growth between 18 and 20 percent and growth in new software license sales between 10 and 20 percent. "We don't think in any way that our strategy is running out of gas," Catz said. But she added: "We are aware of the broader economic environment in which we operate and we can't predict the economy from one quarter to the next."

Oracle's sales and earnings may get a boost after the company earlier this month quietly increased prices on many of its database, middleware and application products by 15 to 20 percent or more. Oracle executives did not comment on the price increases during Wednesday's earnings call.