Sun takeover boosts Oracle sales but hits profits

Enterprise applications giant Oracle recorded a 17% increase in sales to $6.4 billion for its third quarter, reinforced by $458 million in hardware revenues following its recent acquisition of Sun Microsystems.

The protracted takeover of Sun, which was finally completed in January following several antitrust disputes, incurred $306 million in acquisition fees and forced down Oracle’s overall net income for the quarter by 11% to $1.19 billion.

Oracle’s latest set of financial results is the second successive quarter in which the US database management specialist has shown growth, following a four-quarter run of declining revenues. Its return to form is characteristic of the economic recovery that is spreading through the industry, most notably in the US.

By revenue stream, software license sales were up 10% to $1.7 billion, software license updates and support rose 13% to $3.3 billion.

Oracle anticipates that the Sun acquisition will help push revenues by up to 36% for the current quarter. "Our pipeline is very strong in both software and hardware," commented Oracle co-president Safra Catz.

Announcing the results in a conference call, Oracle CEO Larry Ellison said that his company was looking to take advantage of its current strength and make inroads into competitor SAP’s larger business applications market share. "We really think that SAP has lost its way, and if they don’t want to be number one, we do," he said. "We think SAP is vulnerable and we can take them on in a number of industries."

In contrast to Oracle, Germany-based vendor SAP has been clobbered by the recession, and continued to struggle in its most recent quarter, posting a 15% decline in revenues derived from its software licenses, resulting in the departure of then CEO Leo Apotheker.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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