Oracle’s resurgence boosts shares

Oracle’s shares soared more than 11 per cent in early trading in New York on Wednesday after the US business software company continued to show a resurgence of growth in its core database business and a recovery in applications software.

Larry Ellison, chief executive, used the company’s latest earnings news on Tuesday to take direct aim at German rival SAP, which until recently had eaten into Oracle’s market in the US. Claiming big gains in market share against SAP, Mr Ellison said Oracle had a good chance to make further advances with the planned 2008 launch of the next generation of its software applications, known as Project Fusion.

“We’re going to be out in the marketplace for a full two years,” before SAP’s next new applications, he said. “It’s a tremendous opportunity for us to get way ahead of them.”

News of the latest earnings, for the first quarter of Oracle’s fiscal year, added to other signs in recent months that Oracle is starting to reap the gains from its acquisition binge of the past few years, which included the purchase of application software companies PeopleSoft and Siebel Systems.

Application sales were weak following those deals, allowing SAP to gain ground, as corporate customers delayed purchases of new software until they had a clearer idea of Oracle’s future technology direction.

A recovery in recent months, along with the rebound in database sales, has contributed to a 32 per cent jump in the company’s shares this year.

“We believe that our application strategy is working,” Mr Ellison said.

Oracle reported a 15 per cent growth in new licence sales in its core database business, to $576m, echoing the solid growth rate seen in the preceding three months. Database sales growth had slowed to the mid-single digits in previous quarters. The database numbers also include results of the faster-growing middleware business, though Oracle does not provide further details.

New licence sales of applications software, at $228m, were 80 per cent higher than a year before, thanks in part to the inclusion of results from Siebel, which was acquired earlier this year. Even without that, Wall Street had expected growth of around 40 per cent.

Overall, Oracle’s revenues rose 30 per cent to $3.6bn, while net income climbed 29 per cent to $670m, or 13 cents a share. On the pro-forma basis on which Wall Street judges the company, earnings rose by 26 per cent to 18 cents a share, higher than the 16 cents most analysts had expected.