Weak income growth for Oracle

23-09-2005

by Ciara O'Brien

Oracle reported a lacklustre income growth in its latest results as strong sales of applications software was hampered by sluggish growth in its core database business.

Late on Thursday, the firm posted quarterly GAAP net income of USD519 million, up from USD509 million a year earlier. Operating income for the quarter hit USD712 million, with sales increasing by 25 percent quarter-on-quarter to USD2.77 billion. Oracle announced quarterly GAAP earnings per share of USD0.10, with non-GAAP earnings reaching USD0.14.

The technology company saw its revenues increase in numerous divisions, fuelling the modest profit increase for the first quarter in its fiscal year 2006. However, despite this, sales of new database products disappointed industry analysts, increasing by a mere 1 percent to USD492 million.

Other sectors saw better performance, with GAAP software revenues rising in the first quarter, up 23 percent to USD2.13 billion. One of the highest increases was seen in new licence revenues in the company's applications business, which grew by 84 percent to USD127 million. GAAP service revenues were up 34 percent to USD637 million.

"This quarter delivered exceptionally strong applications performance driven by the successful integration of PeopleSoft," said Oracle President and CFO, Greg Maffei. "Cash flow and margins also reached record levels.

Oracle bought PeopleSoft in December 2004 in a deal worth USD10.6 billion. It subsequently announced more than 5,000 redundancies, with the majority of the layoffs taking place at PeopleSoft.

The company also put into motion a massive integration project -- known as Project Fusion -- to integrate PeopleSoft and JD Edwards products with Oracle's business applications. Business applications company JD Edwards was part of the PeopleSoft purchase.

"Our standards based Fusion Middleware new license sales grew 33 percent in the quarter and 26 percent over the last year while BEA's middleware license sales declined over the last year," said Oracle CEO Larry Ellison. "We are optimistic about becoming number one in the middleware business."

Earlier this month, Oracle announced its plans to buy customer relationship management software specialist Siebel for some USD5.85 billion.

Oracle currently employs about 950 people in Dublin and is establishing a new EUR1.6 million operation in Belfast, to support its UK and Republic of Ireland customers.