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Oracle profits beat expectations
…in so-called 'tech spend slowdown'

By Reuters

Published: Thursday 20 December 2007

Oracle posted a 35 per cent rise in quarterly profit on strong new software sales, beating expectations at a time when investors are wary that growth in technology spending may be slowing.

Oracle shares rose 5.8 per cent after the results were released yesterday. Some analysts said the world's number two software maker has a strong portfolio of products that would help shield it from a slowdown in the US economy.

Oracle said net income for its fiscal second quarter which ended on 30 November rose 35 per cent to $1.3bn, or 25 cents per share, from $967 million, or 18 cents a share, a year earlier.

Revenue climbed 28 per cent to $5.3bn, above the average forecast of $5.04bn.

A Goldman Sachs analyst said: "We were thinking a penny or two beat would be a good quarter. This was a great quarter…They are doing a great job of cross-selling from their install base."

Oracle said new software sales rose 38 per cent to $1.7bn, led by a 63 per cent increase in business management applications. Database and middleware sales rose 28 per cent.

Chief financial officer, Safra Catz, said Oracle expected new-software licence revenue to rise 15 per cent to 25 per cent in the fiscal third quarter, and saw non-GAAP (Generally Accepted Accounting Principles) profits per share at 29 cents or 30 cents.

Oracle's growth has accelerated over the past few years as it built on an acquisition binge, snapping up smaller software makers. In addition to acquiring new customers and boosting revenue, Chief executive Larry Ellison has said the deals have helped boost sales of existing products.

Oracle shares rose to $21.96 in after-hours trading, from their close of $20.76.