Oracle Corp rebounded from a poor third-quarter showing with year-end results that beat Wall Street expectations on strong revenue and earnings growth. The software giant reported fourth- quarter net income up 30.9% at $527.4m. On a per share, basis, earnings were $0.36 per share, up from $0.27 in the year-ago quarter, when analysts surveyed by First Call were looking for $0.32. Revenue for the quarter rose 22% year-over-year to $2.94bn and hit the high end of estimates.
Oracle shares had dropped $1.3125 to close at $25.125 prior to the earnings announcement, however, as the company said it would cut roughly 325 jobs in its ongoing effort to cut costs as it moves to a more internet-focused sales model. The layoffs, effective immediately, came across all segments of the business and effected less than 1% of the company’s 43,000 staff.
The strong earnings were welcome for Oracle, which in March reported unimpressive third-quarter results due to a mix of seasonal issues and a delay in the release of the company’s 8i database product. On a conference call with analysts, chief operating officer Ray Lane, breathed a sigh of relief and claimed that the fourth quarter was the most balanced one he’d seen at the company, adding that It’s clear now that the third quarter was an anomaly. For the full year, net income jumped 58.5% to $1.29bn on revenue up 23.6% at $8.83bn. Earnings per share for the year rose 61.1% to $0.87.
Overall software license revenue in the quarter grew 22% year- over-year – the highest jump in eight quarters – as database sales rose 25% and applications sales increased 28%. Services revenue, meanwhile, rose 22% to $1.43bn. On a geographic basis, sales in the Americas rose 21% in the quarter, while EMEA (Europe, Middle East and Africa) saw 18% growth and sales in the Asia Pacific region were also strong. On the balance sheet, the company finished the year with cash and short term investments of $2.56bn, up 33.5% from a year ago.
Within the applications business, sales of the core enterprise resource planning software saw 7% growth, while the newer strategic procurement and customer relationship management offerings accounted for the rest. CRM sales rose 138% in the quarter to $44m, leading chief executive Larry Ellison to boast that Oracle is growing faster than market leader Siebel Systems Inc.
Ellison also touted the latest survey from IDC, which shows Oracle’s overall relational database market share as more than double that of the closest competitor, IBM Corp’s DB2, at 40.4% to 17.8%. Microsoft Corp’s SQL Server is estimated to have a 5.1% share. Ellison said his company’s lead in the Unix and Windows NT markets is even greater and claimed that virtually every large web site in the word is powered by Oracle. He also reiterated his pledge to cut $1bn in costs over the next 18 months as the company attempts to increase margins by about 10 points.
Looking ahead, chief financial officer Jeff Henley said the current fiscal year is off to a solid start, with pipeline momentum better than it was in the preceding two quarters. The company refrained from giving any real guidance for the first quarter, however, noting that the potential danger of Y2K issues still make the next two quarters difficult to predict. Analysts are expecting earnings of $0.15 and $0.21 for the first and second quarters, respectively. รก
