Oracle's revenue up, but licensing down

The company says revenue rose year-over-year in the third quarter, ending seven straight quarters of year-over-year drops. New software license sales were down, though, hurting stock.

Reuters

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April 17, 2003 8:00 a.m. PT

2 min read

Oracle, the world's No. 2 software maker, said Tuesday that its fiscal third-quarter net income grew 12 percent from a year earlier--its first year-on-year profit improvement since the November quarter of 2001.

Total revenues squeaked about 2 percent higher, but sales of closely watched new software licenses were down, contributing to an after-hours sell-off that sent Oracle shares to $11.70, down almost 5 percent from their Nasdaq close of $12.25. A year ago, Oracle shares closed at $12.60 on the Nasdaq.

Oracle Chief Financial Officer Jeff Henley said in a conference call that he sees fourth-quarter share earnings in a range of 12 cents to 15 cents, compared with First Call consensus estimates of 14 cents.

Silicon Valley-based Oracle said its net profit for the quarter ended Feb. 28 was $571 million, or 11 cents a share. The database software company's year-earlier net profit was $508 million, or 9 cents per share.

Total revenue rose 2.4 percent to $2.31 billion from $2.25 billion, ending seven straight quarters of year-over-year revenue declines.

JMP Securities analyst Pat Walravens said Oracle was "light on license revenue, but squeezed out better-than-expected operating efficiencies."

New database software license sales were $602.9 million, down 4 percent from last year. Revenue from new sales of applications--software to automate such things as financial reporting and purchasing--was off 5 percent to $140 million.

Revenue from Oracle's software license updates and product support, by contrast, jumped 16 percent to $1 billion.

Henley said Oracle's revenues came in at the low end of the company's guidance due to rising oil prices and anxiety about a possible U.S. war on Iraq.

"That is the wild card now," Henley said, brushing aside concerns that a recent restructuring of Oracle's North American commercial sales organization was to blame for the shortfall.

Information technology decisions and capital decisions "tend to suffer when there are rising levels of uncertainty," Henley said. Operating margins for the Redwood Shores, Calif., company were 34.5 percent, compared with 34.6 percent last year.