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Oracle unveils aggressive earnings plans

The database giant foresees a lively jump in earnings this year, with PeopleSoft profits kicking in soon.

Oracle on Wednesday predicted strong financial growth for the next six quarters as it presses ahead with its absorption of PeopleSoft.

For its fiscal 2005, which will end in mid-June, the Redwood Shores, Calif.-based company said it expects to post earnings of 62 cents per share, an increase of 24 percent. For fiscal 2006, Oracle said it is targeting earnings per share of 76 cents to 80 cents, which would represent growth of 22 percent to 28 percent.

The 2005 forecast is in line with analysts' expectations, and the 2006 projections beat Wall Street's current forecasts of 70 cents per share.


Roundup

At an analysts' event,
the database giant
talks collaboration and
PeopleSoft integration.
SAP says good luck.

Oracle also said its assimilation of recently acquired rival software maker PeopleSoft is moving forward on schedule and that it expects the newly acquired unit to contribute to its slated earnings growth for both 2005 and 2006.

"Oracle's 2006 outlook shows a lot of confidence in their business and earnings power. It's a clear indication to the Street that PeopleSoft will be significantly (beneficial to their current earnings projection)," said Mark Murphy, an analyst at First Albany.

Still, while more than a third of anticipated growth will come from PeopleSoft's business, Murphy said the greatest contributor will likely be the cost savings and increased Oracle database sales.

"There's the cost savings from elimination of duplicate facilities and head count, but also, another part comes from higher Oracle database sales, as these PeopleSoft customers who run on Microsoft databases or IBM's databases make the switch," Murphy said.

In its mid-December published earnings, for the second quarter of its fiscal 2005, Oracle reported a net income gain of 32 percent, driven largely by strong database software sales. The company reported second-quarter net income of $815 million, or 16 cents per share, compared with $617 million, or 12 cents a share, a year earlier.

Also on Wednesday, Oracle conducted its semiannual analysts' meeting, where the company highlighted its designs on the collaboration market and its plans for PeopleSoft technology.

Meanwhile, Oracle rival SAP on Wednesday announced strong quarterly and annual results--which included a 22 percent increase in net income for fiscal 2004, compared with the prior year. Quarterly profit was up 29 percent. SAP expects its software revenue to rise between 10 percent and 12 percent in fiscal 2005, and for its net income to climb roughly 14 percent.

SAP and Oracle have been battling over customers, with SAP previously noting that it expected to gain more business from defecting PeopleSoft customers.

PeopleSoft's board of directors approved the $10.3 billion takeover deal from Oracle in mid-December, ending a bitter battle waged between the two companies for well over a year.

Earlier this week, Oracle executives said they would soon be ready to begin detailing layoffs at PeopleSoft that will result from the combination of the two companies.

Industry analysts have estimated that at least 6,000 PeopleSoft jobs could ultimately be lost. The company ended 2003 with more than 12,000 employees, according to its latest regulatory filing.

Oracle Chief Executive Larry Ellison previously said he plans to reduce the combined company's research and development budget by $150 million. However, he said the cut is expected to be spread equally between the two companies. He also said some members of PeopleSoft's sales team will be retained after the merger to increase Oracle's current sales staff by 50 percent.