Oracle's Q2 leaves Wall Street wanting more
19-12-2006
by The Register

Oracle has learned that buying double-digit growth doesn't impress investors like it used to.

The insatiable software maker did its best to wow shareholders with a 26 percent rise in second quarter revenue to USD4.2 billion. Net income surged as well, hitting USD1.17 billion on a 20 percent year-over-year rise. The results were aided by Oracle's numerous acquisitions.

But the cruelest of all indicators -- new software licences -- smudged Oracle's otherwise shiny figures.

New software sales rose just 14 percent year-over-year. Wall Street hoped Oracle could push that figure to between 15 percent and 20 percent. New database and middleware licences rose 9 percent -- a drop from the first quarter -- and new application licences increased 28 percent -- missing a 40 percent forecast from analysts.

So, investors chipped away at Oracle shares in the after-hours markets, nicking 2.5 percent (at the time of this report) off Monday's USD17.91 close.

Oracle's CFO Safra Catz blamed the new sales softness "on a number of deals that didn't close during the quarter."

Oracle's total software revenue jumped 23 percent during the second quarter to USD3.2 billion, while services charged higher 41 percent to USD949 million.

CEO Larry Ellison cheered his vigorous acquisition strategy, saying Oracle "has strengthened our competitiveness in several industries including retail, banking, telecommunications and utilities."

President Charles Phillips was relegated to rival bashing duties.

"We continue to gain market share in applications from SAP, in middleware from BEA, and in database from IBM," he said. "In Q2 our middleware new licence growth was exceptionally strong. We expect to pass BEA in total middleware new licence sales later this year."

The Register and its contents are copyright 2006 Situation Publishing. Reprinted with permission.