Oracle grows profit as revenue falls 5%

Database, middleware and applications vendor Oracle grew its net income by 4% to $1.1 billion during the first quarter of the present financial year, despite the fact that revenues fell 5% year-on-year to $5.1 billion.

The improved margin was due mainly to the fact that support fees and contract renewals – cheaper revenue to earn than new sales – represented a greater proportion of total revenues than usual, Oracle president and CFO Safra Catz said in a conference call to investment analysts.

But as that suggests, new license revenue – a lead indicator for future support revenues – fell drastically during the quarter, down 17%to $1.0 billion.  

One particular trouble spot for Oracle was its European database and middleware division sales, which fell by a third to $224 million. Ingeniously, the company blamed this decline – in part at least – on rival applications maker SAP. A decline in sales for the German company is depressing demand for Oracle databases on which to run its applications, Oracle said.

When asked how the company is reacting to postponement its proposed acquisition of Sun Microsystems, pending EC anti-trust approval, Catz said “we continue to do integration planning.” But for the meantime, she added, Oracle is exploring avenues of integration – such as the combined Oracle / Sun database appliance announced this week – that “we can do together at arm’s length”.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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