Oracle Posts Solid Gains In Sales And Profit

Oracle on Monday reported 8% revenue growth to $2.5 billion in its second quarter ended Nov. 30, fueled by increasing sales across the its product lines in new software license sales and license updates. Net income was up 15% to $617 million or 12 cents per share.

New software license sales--a key growth indicator--increased 13% to $849 million during the quarter while software license updates and product-support revenue were up 17% to more than $1.1 billion. The company's applications-outsourcing business increased 82% in the quarter while services-related revenue dipped 10% to $529 million. All major geographic regions posted sales growth in the quarter, the company said.

New license sales for applications increased a healthy 27%, which Oracle said indicates that it's gaining market share from rivals such as PeopleSoft, SAP, and Siebel Systems. New license sales for Oracle's flagship database software were up 11% despite the fact the company is close to shipping Oracle 10g, the product's next major release.

Oracle also disclosed that 25% of the database-related revenue in the quarter was from add-on options such as the Real Application Clusters clustering software, sales of which grew 63%. CEO Larry Ellison said Real Application Clusters and the grid computing capabilities in the upcoming 10g release prove Oracle is overcoming concerns that database products are becoming commodities.

Oracle forecasts revenue growth of 7% to 10% in the current quarter and new-license revenue growth of 5% to 15%, CFO Jeff Henley said. And the company expects modest growth in 2004. "Like many of our customers," Henley said, "we sense an upturn."