Oracle Foresees A Strong 2Q After Slow Start To Year - InformationWeek

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09:58 AM

Oracle Foresees A Strong 2Q After Slow Start To Year

First-quarter software license sales were down 7% compared with a year earlier, but the company says it expects a solid year.

Despite a slow start for its fiscal year, Oracle execs say they see improvement in the economy and expect a strong fiscal year.

"We stumbled some with execution issues getting started in the first quarter, which is not untypical," CFO Jeff Henley said during a first-quarter earnings call Friday. "We'll make it up in the second quarter. We believe everything is in place for a better year"

First-quarter sales of new software licenses were down 7%, to $525 million compared with a year ago, and company officials said much of the erosion took place in North America. Overall, Oracle reported net income of $440 million, or 8 cents per share, on revenue of $2.07 billion, compared with net income of $343 million, or 6 cents, on revenue of $2.03 billion in the year-ago quarter.

While the figures were an improvement over a year ago, they were down significantly from the fourth quarter of fiscal 2003, when the company reported earnings per share of 16 cents, on net income of $858 million and revenue of $2.8 billion.

The company blamed the declines in revenue and earnings drop primarily on the seasonality of sales.

Oracle also reiterated its intent to pursue its $7.5 billion hostile takeover bid for rival software maker PeopleSoft Inc. The $19.50-per-share offer is in a holding pattern until late October or early November, when Oracle expects the Department of Justice to complete its antitrust review of the proposed deal.

In its most recent quarter ending June 30, PeopleSoft's license sales slipped even further than Oracle, falling by 15%. PeopleSoft last week released a bullish outlook as it looks to boost its results from a recently completed $1.8 billion acquisition of J.D. Edwards & Co.

Oracle's database sales fell more than the applications business during the past quarter. New database licenses totaled $408 million, down 7% from last year. Oracle earlier this week introduced its latest version of database software as part of an effort to stir more demand.

Henley said during the conference call that some of the software sales that Oracle began negotiating over the summer are likely to close later in the fiscal year. "We had a number of deals slip because we just ran out of runway," he said.

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