Sun is profitable, says Oracle
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Enterprise software and systems vendor says it has turned Sun Microsystems' business around in just one financial quarter
Oracle says that Sun Microsystems contributed $400 million in income during its latest financial quarter, the first full quarter since it acquired the systems and hardware vendor.
“Our estimate for the Sun business contribution income comes in at over $400 million for our first full quarter after the merger," said Oracle president Safra Catz. "This compared to the loss in Sun’s quarter ending June of last year when Sun was an independent company.”
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Indeed, Sun was disastrously loss making in the financial quarters preceeding its acquisition. In October 2008, the company reported a quarterly loss of $1.7 billion thanks to an acquisition write-down.
Oracle has instigated a number of measures to turn the Sun business around. One of these was to cut out the channel partners in its 4,000 most valuable customer engagements, instead selling to those customers directly.
But despite the claim Oracle CEO Larry Ellison made in January 2010 that "we're not cutting Sun to profitability, we're growing it to profitability," job cuts are also a part of the Sun integration strategy.
An SEC filing by Oracle earlier this month revealed that it plans to incur between $550 million and $650 million in 'restructuring' charges as a result of the acquisition, suggesting significant redundancies in future.
Revenue for the fourth quarter rose 39% to $9.5 million. Much of that growth is accounted for by the addition of Sun's business but there was organic growth too – sales of new software licences grew 14% to approximately $3.1 billion, while support fees rose 12% to $3.4 billion.
The company's net income grew 25% to $2.4 billion for the fourth quarter.
As the graph below shows, Oracle maintained faster revenue growth than that of the industry average (as measured by the Information Age Index) in all but two financial quarters at the height of the recession.
