AP
Oracle 1Q profit rises 28 percent, beats Street
Thursday September 18, 6:53 pm ET
By Jessica Mintz, AP Technology Writer
Oracle 1st-quarter profit climbs 28 percent to beat Street despite turbulent economy


Oracle Corp. said Thursday its fiscal first-quarter profit jumped 28 percent, beating Wall Street's expectations, as software sales stayed steady despite turmoil in the U.S. economy.

The business software maker's net income for the three months ended Aug. 31 rose to $1.08 billion, or 21 cents per share, from $840 million, 16 cents per share, a year ago.

Excluding expenses for employee stock options and acquisitions, Oracle posted earnings of 29 cents per share, two cents more than analysts had expected, according to a Thomson Reuters poll.

Revenue increased 18 percent to $5.33 billion.

New software license sales, a measure closely watched by investors, increased 14 percent, within the 10 percent to 20 percent range Oracle had predicted. The Redwood Shores, Calif.-based company said changes in foreign exchange rates accounted for 4 percentage points of the increase, less than the 5 percentage points it had originally expected.

Revenue from software license updates and product support increased 23 percent to $2.94 billion.

Looking ahead to the current second quarter, Oracle expects new software license sales will grow by a potentially lesser amount: 2 percent to 12 percent, or 5 percent to 15 percent excluding the effect of currency fluctuations, said Chief Financial Officer Safra Catz. In the same quarter last year, sales of new licenses jumped 38 percent.

Still, Oracle forecast adjusted earnings per share of 35 to 36 cents per share in the current quarter. Analysts were already expecting 35 cents per share.

Catz appeared unfazed about the ongoing turmoil in the financial sector, and confident that customers won't be cutting Oracle from their budgets.

"The company has so much momentum, such a broad product line. If the customer is buying they're likely to buy from us," she said. "If they've got to decide something not to spend on, it's probably with some smaller guy."

Analyst Trip Chowdhry of Global Equities Research said he believes Oracle was trying to keep its tone positive ahead of Oracle OpenWorld, a major conference that begins Saturday. The analyst said he believes Oracle's weak new software license sales forecast indicates a slowdown ahead for information technology spending.

But the report and Catz's comments appeared to satisfy investors who had feared the weakened economy would dampen demand for the business software maker's products. Shares of Oracle gained $1.10, or 5.9 percent, to $19.85 in after-hours trading, after adding 65 cents, or 3.6 percent, to end the regular session at $18.75.