Oracle earnings point to IT resilience

Sales of information technology to big companies and governments may have held up better than expected in the face of financial market volatility and fears of renewed economic weakness, to judge by the latest quarterly earnings from Oracle.

The US software company, whose unusual August quarter-end makes it an early barometer of broader demand for IT, reported late on Tuesday that sales and earnings had not been dented by recent events. It also issued a forecast for the current quarter that was in line with Wall Street’s expectations.

Announcing the results, Larry Ellison, chief executive, also counted Oracle out from making a rival bid for Autonomy, the UK software company that last month agreed to a $10.3bn acquisition by Hewlett-Packard – a price that Mr Ellison described as “shockingly high”.

Relief that Oracle expected to maintain its current sales momentum, with revenues projected to grow 4-8 per cent in the current quarter, pushed its shares up more than 3 per cent in after-market trading, reversing a decline of more than 2 per cent earlier in the day.

“We were strong in all the sectors you may be reading are struggling, both in Europe and the US,” said Safra Catz, co-president. Oracle did not see a slowdown in sales to government or banking customers on either side of the Atlantic, she added.

Meanwhile, Mr Ellison mounted a strong defence of the hardware business that Oracle assumed with last year’s acquisition of Sun Microsystems. While the division registered a continued decline, with sales falling 11 per cent on the same quarter last year after adjusting for currency swings, to $1.03bn, the Oracle boss said the focus on higher-margin products was starting to pay off. “I don’t care if our commodity [server] revenues go to zero,” he said. “We don’t make money selling that stuff.”

Oracle’s latest figures were underpinned by new software licence sales of nearly $1.5bn, a rise of 11 per cent after adjusting for currency swings. Overall, revenues rose 12 per cent to $8.37bn, though growth was only 5 per cent in constant currencies.

On the pro-forma basis on which Wall Street judges the company, Oracle reported earnings per share of 48 cents, up from 42 cents the year before. Under formal accounting conventions, earnings per share rose to 36 cents from 27 cents.

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