Oracle 3Q Sales Up, But Earnings Are Down

Oracle on Tuesday reported a solid 18% increase in sales in its third quarter ended Feb. 28, but one-time charges associated with its PeopleSoft acquisition reduced the company's earnings.

For the quarter, Oracle reported sales of $2.95 billion, up 18% from the same period last year. But net income was $540 million, or 10 cents per share, down 15% from last year. Most of that was because of charges resulting from the PeopleSoft acquisition in January, including amortization of intangible assets, in-process research and development expenses, restructuring costs, and stock-based compensation related to PeopleSoft stock options.

Software sales, which account for nearly four-fifths of Oracle's total revenue, increased 15% to $2.34 billion on a GAAP (generally accepted accounting principles) basis. That number didn't include revenue from PeopleSoft, which Oracle owned for two of the quarter's three months. When included on a non-GAAP basis, it increased software revenue by 23% to $2.48 billion.

Service-related revenue shot up 26% to $614 million in the quarter.

Oracle said new software license sales, a key growth indicator, increased 12% to $947 million. New database license revenue also increased 12% to $782 million. Research firm IDC recently reported that Oracle increased its share of the worldwide relational database market by a point in 2004 to 41.3%.

On Tuesday, Oracle signed a definitive agreement to acquire retail-management-application vendor Retek Inc. for $11.25 per share, or approximately $670 million.