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Oracle Reports Solid Quarterly Growth, With Big Boost From Sun Hardware

Oracle's revenue and earnings for the second fiscal quarter of 2011 showed strong growth over last year, while operating margins of its Sun hardware business did very well.

Even with the Sun numbers factored out, Oracle still reported solid growth in its software business over the same quarter last year.

Oracle said revenue for its fiscal 2011 second quarter, which ended November 30, hit $8.6 billion, up 47 percent over the $5.9 billion it reported for its second fiscal quarter of 2010.

However, about 20 percent of that total revenue figure, or about $1.8 billion, came from hardware systems sales resulting from Oracle's January acquisition of Sun Microsystems.

Oracle reported new software license revenue of $2 billion, up 21 percent compared to last year, and software license updates and product support of $3.6 billion, up 12 percent over last year. Together, Oracle's total software revenue reached $5.6 billion, up 15 percent year-over-year.

Oracle also reported income for the quarter of $1.9 billion, up 28 percent over the $1.5 billion it reported last year, as well as earnings per share of 37 cents, up 27 percent over the same quarter last year.

While Oracle did not provide hardware revenue comparisons between this year and last, Safra Catz, one of the company's two co-presidents, said that its Sun hardware gross margins increased to 53 percent.

Including the Sun hardware, Oracle's overall operating margins were about 44 percent, Catz said. "At this rate, we could (soon) be back to pre-Sun merger operating margins," she said.

Mark Hurd, the other Oracle co-president and former president and CEO of Hewlett-Packard, said that Oracle entered its third fiscal with a record hardware sales backload.

Looking forward, Catz said that Oracle expects its software license revenue to grow in its third fiscal quarter by 10 percent to 20 percent and total revenue to grow between 31 percent and 35 percent compared to the second fiscal quarter. She also said the company expects earnings per share to reach between 34 cents and 36 cents.

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