Oracle Promises Hardware Sales Turnaround In Upcoming Fiscal Year

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Oracle's hardware revenue will stabilize and begin to grow in fiscal 2013 that begins June 1, company executives said Tuesday, as sales of the company's "engineered systems" offset declining sales of commodity servers.

"Next fiscal year our hardware business should be a growth story," CEO Larry Ellison said during the company's third-quarter earnings call, followed immediately by president and CFO Safra Catz who said: "It will be."

The comments came as Oracle reported third-quarter revenue that met the company's earlier forecasts, and new software license sales and earnings-per-share that exceeded expectations. Those results marked a rebound from three months ago when the company reported unexpectedly slower sales in the second quarter -- news that caused the company's stock to drop.

[Related: Oracle Teams With Cloudera To Tackle Big Data]

For its third fiscal quarter ended Feb. 29 Oracle reported total revenue of $9.0 billion, up 3 percent from $8.8 billion in the same period one year earlier. Oracle reported net income of $2.5 billion for the quarter, up 18 percent from $2.1 billion in the third quarter last year.

Oracle's hardware sales have been steadily shrinking since it acquired Sun Microsystems in early 2010 for $7.3 billion. Oracle executives have attributed that decline to the decision to eliminate sales of low-margin commodity server products.

In the just-completed quarter total hardware systems revenue was $1.47 billion, down 11 percent from one year earlier. That number includes sales of hardware systems products ($869 million, down 16 percent year-over-year) and hardware systems support revenue ($604 million, down 4 percent year-over-year).

Oracle is focusing its efforts on what it calls "engineered systems" that combine Sun hardware with Oracle software products targeting specific tasks such as handling huge volumes of data. Those systems include the Exadata database appliance that launched in 2008, the Exalogic Elastic Cloud server that debuted in 2010, and the recently introduced Exalytics in-memory database appliance.

Next: Software Sales Rebound In Q3

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