Oracle profit jumps 27 percent to $1.3B

Iran Materials 23 June 2006 10:45 (UTC +04:00)

(AP) - Business software maker Oracle Corp. on Thursday said its fiscal fourth quarter profit rose 27 percent on record revenue as sales surged across most of its business lines and geographic regions.

Net income for the three months ending May 31 rose to $1.3 billion, or 24 cents a share, compared with $1.02 billion, or 20 cents, in the same quarter of last year. Revenue grew 25 percent to $4.85 billion from $3.88 billion. The results were largely in line with estimates issued last week, when the Redwood Shores-based company said it expected to beat an earlier financial forecast, reports Trend.

Investors in after hours trading largely shrugged off the news, which included a forecast for the current quarter that was largely in line with analyst expectations. Oracle shares have largely stagnated over the past couple of years, as growth for business software has slowed.

Excluding acquisition expenses and other costs, Oracle earned 29 cents per share, 1 cent higher than the average estimate among analysts polled by Thomson Financial. Sales also beat Wall Street estimates of $4.7 billion. If it weren't for a higher-than-expected tax rate, Oracle would have earned 30 cents, President Safra Catz said.

New software license sales, which investors watch closely because they are a strong indicator of future performance, rose 32 percent to $2.1 billion from $1.6 billion last year. Results for both periods include Oracle's $11.1 billion acquisition of PeopleSoft Inc.

Since early last year, Oracle has spent more than $20 billion acquiring competitors in the business software arena in a bid to combat slowing growth.

"It was a very, very strong finish to a very critical year for Oracle," Catz said on a conference call with reporters. "It shows that our strategy is working and taking hold."

Catz forecast profit before one-time costs in the current quarter would be 16 cents, matching the average analyst estimate. Sales will rise 19 percent to 20 percent from the same period last year, she said, which translates to $3.29 billion to $3.32 billion, slightly below the $3.36 billion analysts had been expecting.

Catz said the forecast was highly dependent on currency exchange rates, which have fluctuated recently. Rates during the fourth quarter were largely neutral, after being "pretty negative" over previous quarters, she said.

New licenses for business applications, which help automate payroll and other administrative tasks, rose 83 percent to $641 million, from $350 million last year. Licenses in Oracle's more traditional group for databases and related software, which act like electronic filing cabinets, grew 18 percent to $1.48 billion, from $1.26 billion.

Besides PeopleSoft, Oracle has also swallowed up other former competitors, including Siebel Systems Inc. for $6.1 billion and smaller companies for about $2 billion. On Wednesday it closed its acquisition of Portal Software Inc. for about $220 million.

Chief Executive Larry Ellison has said the takeovers will allow Oracle to increase profit by 20 percent per year and overtake competitors. Catz said the plan enabled Oracle's applications business to grow faster than Germany-based SAP AG, its so-called middleware business to grow faster than San Jose-based BEA Systems Inc. and its database sales faster than International Business Machines Corp.

For the full fiscal year, net income rose 17 percent to $3.38 billion, or 64 cents, from $2.87 billion, or 55 cents. Revenue grew 22 percent to $14.38 billion, from $11.8 billion.

Touching on an issue sweeping Silicon Valley companies, Catz said she didn't expect Oracle to face problems as a result of stock options it has issued in the past. The company has long had a policy of pricing options, which allow an employee to buy shares in the future at a set rate, based on the closing price the day before the options were granted.

To date, 46 companies are under investigation or doing their own internal probes of whether options were backdated. That practice would allow executives to reap a larger profit on the sale of the stock as the price rose.

Oracle released the results after the stock market closed. The company's shares rose 7 cents in extended trading. Earlier, the stock fell 20 cents to close at $14.33 on the Nasdaq Stock Market. Oracle shares have gained more than 17 percent so far this year.