Oracle posted solid fourth-quarter fiscal results on June 24, with an increase in net profits and revenue by 25 percent and 39 percent (GAAP), respectively, when compared to the same period last year. The rise in profits was attributed to higher revenue from databases and business software as well as hardware sales from the acquisition of Sun Microsystems. Revenues went up from $6.9 billion a year ago to $9.5 billion.

New software license revenues rose 14 percent to $3.1 billion in the quarter that ended May 31, and overall software revenue rose 13 percent year over year to $6.6 billion, Oracle reported.

Sun hardware brought in $1.2 billion during the fourth quarter period. Excluding special charges, Sun contributed more than $400 million in operating income during the quarter, Oracle President Safra Catz said. “This compares with a loss in Sun’s quarter ending June of last year, when Sun was an independent company," commented Catz. "Now that Sun is profitable, we have increased confidence that we will meet or exceed our goal of Sun contributing $1.5 billion to non-GAAP operating income in FY2011, and $2.0 billion in FY2012.”

Oracle estimates that in the fourth quarter of fiscal 2010, Sun reduced GAAP operating income by approximately $100 million.

Reporting on the earnings conference call, IDG's Chris Kanaracus identified Catz as saying a number of factors are helping the Sun business and users are reassured by Oracle's ownership of the company.

"Customers are buying a lot of hardware now. They are very, very loyal to technology they love," she said. "Now that they know it has a future ... they are much more comfortable making those investments again."

Also, a new support policy for Sun products, which includes attractive pricing models, has been "very well-received" by customers, Catz said. "A lot of customers that had not been on support have come back to Sun," she said.

Kanaracus writes that Oracle CEO Larry Ellison said the company is planning to double the size of Sun's sales force.

Ellison made the point that the Oracle-Sun Exadata Version 2 database machine outperforms IBM in both data warehousing and transaction processing. “As a result, some of IBM’s largest customers began buying Exadata machines rather than big IBM servers in Q4 of FY2010, " he said. "And the FY2011 Exadata sales pipeline is fast approaching the $1 billion mark.”

An overview of GAAP numbers reported for the quarter:

• Total revenues: up 39 percent to $9.5 billion
• New software license revenues: up 14 percent to $3.1 billion
• Software license updates and product support revenues: up 12 percent to $3.4 billion
• Operating income: up 14 percent to $3.3 billion, with a 35 percent operating margin
• Net income: up 25 percent to $2.4 billion
• Earnings per share: up 24 percent to $0.46
• Operating cash flow on a trailing twelve-month basis was $8.7 billion

For fiscal year 2010:

• Total revenues: up 15 percent to $26.8 billion
• New software license revenues: up 6 percent to $7.5 billion
• Software license updates and product support revenues: up 11 percent to $13.1 billion
• Operating income: up 9 percent to $9.1 billion, with a 34 percent operating margin
• Net income: up 10 percent to $6.1 billion
• Earnings per share: up 11 percent to $1.21

"We executed better than expected on both the top and bottom line for the quarter,” said Oracle CFO, Jeff Epstein. “This strong performance plus disciplined business management led to a non-GAAP operating margin of 46 percent in Q4, fully including the $1.2 billion of Sun systems hardware that we sold in the quarter.”

More Information

Oracle's Q4 FY 2010 Oracle Earnings Conference Call

Oracle's Q4 Fiscal 2010 Financial Results [...read more...]

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