Oracle, the top database software maker, said its net income was $527 million, or 36 cents a share, up from $402.8 million, or 27 cents a share, a year ago. Per-share earnings exceeded the consensus expectation of 32 cents among Wall Street analysts polled by First Call. Estimates had ranged from 35 to 29 cents a share.
Revenue rose to $2.9 billion from $2.4 billion, reaching the high end of analyst estimates ranging from $2.6 billion to $2.9 billion.
"We caught the [Internet] wave early and we are beginning to pick up velocity," chief executive Larry Ellison said in a conference call.
But chief financial officer Jeff Henley acknowledged that following the prior quarter's disappointing revenue growth, Wall Street wasn't looking for a lot from today's report. Some earnings estimates fell around May 13, after the company held a conference with analysts.
"They set fairly conservative expectations and we greatly exceeded them," Henley said.
Investors have worried about Oracle's slowing revenue growth as corporations delay software spending until after the Year 2000. Many companies are investing in preventing Y2K computer bugs instead of purchasing Oracle's database and applications programs.
"The real question with Oracle this quarter is not the earnings, it's the revenue," said Gary Abbott, an analyst at Punk Ziegel, who rates the stock "market perform."
Oracle president Ray Lane called the database giant's disappointing revenue growth in previous quarter "an anomaly," citing a series of internal moves meant to strengthen sales efforts. Sales were also hurt by a two-month delay in the release of Oracle 8i, the new version of Oracle's flagship database software.
In the fourth quarter, Oracle said both software sales and services revenue grew substantially. Database license sales were up 25 percent, while applications sales grew 28 percent.
The company's core applications business for enterprise resource planning (ERP) software increased 7 percent, however, with the bulk of the application growth coming in two new segments, online procurement software and front office or customer relationship management (CRM) software. The latter earned $44 million, up 138 percent from a year ago.
Ellison had predicted earlier this month that the earnings report would make Oracle "the hottest company in town," and the Wall Street analysts on this afternoon's conference call enthused with congratulatory comments for Oracle's management.
Oracle's stock closed at 25.125 today, off 1.3125. After the earnings report however, the stock rose 2.5 to 27.625 in after-hours trading.
Earlier today, Oracle said it will lay off about 325 people to cut costs as it tries to reshape its business toward a build-to-order Internet model. The firings account for less than 1 percent of the company's 43,000-person global work force and are effective immediately. None of those laid off are developers, but some sales reps were let go.
For the rest of 1999, Ellison sounded a cautious note, seeking to dampen Wall Street expectations.
"We think our products are very strong, but we like everyone else could be victimized by a [Y2K] slowdown," Ellison said. "It's an unusually complicated quarter to forecast."
However, Henley said the pipeline of orders expected to close in the current quarter "looks as good or better than in the past several quarters."
Ellison had vowed earlier this month to cut $1 billion in costs over the next 18 months to make Oracle more efficient, emulating the business models of online companies. His strategy is to sell customized programs over the Internet, where Oracle will build each software sale to order and deliver it through the Web to save on distribution and sales costs.
Oracle also used the earnings report to take some shots at IBM, arguing that IBM's claims to have passed Oracle in database sales are incorrect.
Bloomberg and Reuters contributed to this report.