Earnings Rocket 62% For Oracle



Oracle's applications business continued its rapid growth during the second quarter, fueling a spike in the software vendor's profits and a healthy gain in revenue

For the quarter ended Nov. 30, Oracle reported sales of $2.66 billion, up almost 15% from the $2.32 billion reported during the same period last year. Earnings soared 62%, from $384.5 million (6 cents per share) a year ago, to $622.8 million (11 cents).

Application sales grew 66%, to $279 million in the quarter. Oracle has been making a big push with its E-business applications as it competes with Siebel Systems, Ariba, and i2 Technologies. Database software sales increased 19%, to $775 million. The overall database software market is growing at 18% to 20%. After accounting for currency fluctuations, application sales grew 73%, and database software sales increased 26%, the company reported.

"I think Oracle is 18 months into a five-year growth spurt," says Rob Tholemeier, an analyst with First Security Van Kasper. Oracle watchers fretting over developments such as the recent departure of several Oracle execs are overlooking Oracle's fundamental strengths, he says. "This is a company with a growing, accelerating top line. And they're growing revenue faster than their expenses, so their margins are expanding. It's just basic arithmetic."

Total software license revenue was up 25%, to $1.1 billion in the quarter, while service-related revenue increased 9%, to $1.5 billion.

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