Oracle increases profits, but licence revenues shrink

19 March 2003 Oracle, the world’s second largest software company, has reported a 12% increase in net income for its third financial quarter, despite a decline in new database and business application licence sales.

For the quarter to the end of February, Oracle’s revenues edged up 2.4% to $2.3 billion, from $2.25 billion in the same quarter in 2002. Net income increased to $573.1 million, compared with $508 million in the year-ago quarter. This ended seven consecutive quarters of year-on-year decline in profits.

This growth was fuelled largely by sales of software upgrades to existing customers and software maintenance, which jumped by 16%.

Oracle’s new licence revenues, however, continue to slide. Overall, revenue from new software licences fell to $743 million from $777 million in the same quarter in 2002. Within that total, new database licence sales for the third quarter reached $602.9 million, down 4%, while new sales of business applications software fell almost 5% to $140 million.

Oracle spent much of 2002 reorganising its sales force along specific product lines. The company now requires account managers to specialise in either applications or database technology, yet this has had no positive impact in terms of new sales.

For its current quarter, Oracle could only offer a broad forecast. The company predicted that total revenue would range between a 6% decline and a 2% increase compared with the fourth quarter of 2002, while sales of new software licences would range from a decline of 15% to an increase of 5%.

Chief financial officer Jeff Henley said the reason for this uncertainty had much to do with the impending military action in Iraq and how it might impact technology investment. “[Capital] decisions tend to suffer when there are rising levels of uncertainty,” he told investors.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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