Fiscal 1991 was a difficult challenging year which forced us to re-examine our growth objectives, commented Larry Ellison as he reported a year end loss for Oracle of $12.4m on turnover up 12% to $1,028m. Fourth quarter profits plummeted 87% to $5.5m although a $20m extraordinary charge for restructuring accounted for a large part of the decline. Turnover for the fourth quarter was down 10% at just over $287m – licence revenue dropped 21% to $187.3m as service revenue grew 21% to $100.8m. Receivables measured in numbers of days of sales were reduced by nine days in the fourth quarter and Geoff Squire, president of worldwide distribution, is looking for further improvement. Meanwhile, Oracle’s protracted negotiations with its banking syndicate rumble on – a short-term agreement has been reached with the syndicate to tide Oracle over the period until August 31 when its deal with Nippon Steel Co comes into effect. Without such an agreement, long-term debt would have had to be entered as short-term debt. The reason for the current delay in securing a new long-term credit facility is that following the Nippon Steel deal and Oracle’s cash-positive position – $91m cash positive over the last two quarters of 1991 – Oracle’s overdraft requirements have changed. It will now be looking to secure a working overdraft of around $100m with a smaller number of banks in the syndicate. The company is planning to modify its business practices over 1992 to bring it in compliance with the remaining provisions of the proposed Statement of Position on Revenue Recognition. This means that all maintenance revenue and all systems integration revenue will be recorded rateably for the duration of a contract. Geoff Squire does not believe this change will have a significant impact on profit and loss, but earlier this year Oracle’s director of investor relations suggested that such a change will not affect net income by more than 10% (CI No 1,639) – some might think a 10% swing in net income is significant. Of course all software companies will fall prey to this change, but those with a more aggressive growth in licence revenue will not be hurt so much. For example, Cognos expects only a 3% hit to its net income line. As for the strange business practices uncovered in the third quarter, Squire says that good business practices have been adopted in the field, top quality management is now in control and people are no longer taking revenue on guarantees. No further job cuts are foreseen at the moment. Looking to the future, Squire believes that the recession has bottomed out and that Oracle is strong from a cash point of view at a time when competitors are retrenching and selling out. The company is much stronger than 12 months ago: quality programmes are in place, there has been intensive staff training in client service and 1,000 man years of development has taken place over the year.