Oracle 4Q Profit Surges 23 Percent
Oracle Corp.'s fiscal fourth-quarter profit rose 23 percent as the business software maker harvested more sales from the crop of customers picked up in a $25 billion shopping spree that has buried much of its competition.
The Redwood Shores-based company said Tuesday that it earned $1.6 billion, or 31 cents per share, for the three months ended in May. That represented a 23 percent improvement from net income of $1.3 billion, or 24 cents per share, at the same time last year.
It marked the sixth consecutive quarter in which Oracle's profit has surged by at least 20 percent. Management has already promised to boost its earnings by at least 20 percent annually during the next two years, too.
In its latest fiscal year, Oracle earned $4.27 billion, or 81 cents per share, a 26 percent increase from the previous year. Full-year revenue increased 25 percent to hit $18 billion for the first time.
The gains have coincided with an aggressive expansion engineered by Oracle's audacious chief executive, Larry Ellison. Since the end of 2004, Oracle has spent about $25 billion on more than 30 acquisitions of other software makers. Ellison assured analysts during a Wednesday conference call that Oracle intends to remain on the prowl.
If not for charges and expenses unrelated to its ongoing business, Oracle said it would have earned 37 cents per share during its latest quarter -- 2 cents more than the average estimate among analyst polled by Thomson Financial.
Revenue during the fourth quarter, Oracle's busiest of the year, totaled $5.83 billion, a 20 percent increase from last year. The revenue was more than $200 million above the average analyst estimate.
In a key measure of a software maker's health, Oracle's sales of new product licenses rose 17 percent during the quarter to $2.48 billion. Management had forecast an increase of 5 percent to 15 percent.
New software licenses plant the seed for future revenue as customers pay for product maintenance and upgrades.
Oracle expects its sales momentum to accelerate in the current quarter -- traditionally its most sluggish period. Safra Catz, Oracle's co-president and chief financial officer, predicted sales of new software licenses will increase by 20 percent to 30 percent in the three months ending in August.
"We really feel like we are going on all cylinders," Catz told analysts Tuesday in a conference call.
Excluding stock option and acquisition costs, Oracle expects to earn 21 cents per share in its fiscal first quarter -- in line with the average analyst estimates.
Oracle shares fell 32 cents to finish at $19.16 during Tuesday's regular session, then recovered 21 cents in extended trading.
The company's market value has climbed by about $30 billion since Oracle began buying its smaller rivals.
By devouring a long list of companies like PeopleSoft Inc. and Siebel Systems Inc., Oracle has been steadily gaining more market share in business applications software -- products that help companies, universities and government agencies automate their operations.
Germany-based SAP AG has been the longtime leader business applications, but Oracle has been vying for a bigger piece of the pie to supplement its own dominance of the database software market.
The strategy appears to be paying off, based on the latest data from International Data Corp. SAP's worldwide share of the $81 billion business applications market rose to 9.4 percent in 2006 from 9.2 percent in the previous year while Oracle's share climbed to 5.8 percent from 4 percent, according to IDC.
"Oracle has the wind at its back," said Albert Pang, an IDC research director. "The only question is if they can keep executing."