March 24, 2011 11:46 pm

Oracle earnings beat expectations

Oracle, the US software maker, claimed market share gains from rival SAP on Thursday as it reported quarterly earnings that showed a further rebound from the economic downturn.

A better than expected 29 per cent rise in revenue from new software licences pushed the company’s earnings well above its own and Wall Street forecasts.

Oracle issued a forecast for its current quarter ahead of most estimates and raised its dividend by 20 per cent. The company’s shares climbed 3 per cent in after-market trading, having already risen more than 2 per cent earlier in the day.

Safra Catz, one of two Oracle presidents, would not attribute the group’s success to a broader recovery in IT spending, claiming it reflected the success of a wave of Oracle software products and the successful integration of Sun Microsystems, which it acquired early last year.

In applications software, where Oracle competes most directly in SAP, new licence revenue grew by 31 per cent, to $639m, after stripping out the effect of currency movements.

With revenues up more than 50 per cent in the past two years, Oracle’s applications business had grown 10 times faster than that of SAP, Ms Catz claimed, though the German company produced surprisingly strong software sales in its most recent quarter.

Spending on applications is usually closely tied to economic recovery, as companies look to expand their operations or move into new markets, and the Oracle president said the company had seen a solid recovery take hold last year.

New software sales in the group’s database business grew by 26 per cent at constant currencies, to $1.58bn.

Oracle said it was on the way to its target of generating $1.5bn in operating profits from the Sun business by the end of its fiscal year in May.

Oracle reported a 37 per cent increase in revenues to $8.8bn, with net income rising 78 per cent to $2.1bn, or 41 cents a share. On the pro forma basis that Wall Street assesses the company, earnings reached 54 cents a share.

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