Oracle Takes Hit on Sun Costs but Records Solid Q3

By Chris Preimesberger  |  Posted 2010-03-25

Oracle, after a tumultuous 2009 during which it acquired Sun Microsystems and battled IBM and SAP in the markets, reported March 25 that it came through the last quarter in good financial shape-despite the expensive legal and regulatory issues surrounding the Sun deal.

The enterprise database and middleware maker's quarterly profit slipped by 11 percent due to its digestion of the $7.4 billion deal that brought it Sun. Nonetheless, the company reported profit of $1.19 billion, or 23 cents per share, for the quarter ended Feb. 28.

The profit margin was down from $1.33 billion, or 26 cents per share, in 2009.

Oracle's buyout of Sun closed on Jan. 27. Oracle Chief Financial Officer Jeff Epstein said the acquisition added $458 million in revenue to the company's fiscal third quarter but restructuring and operating costs took their toll on the bottom line.

"The Sun integration is going even better than we expected," Oracle President Safra Catz told listeners on a conference call. "We believe that Sun will make a significant contribution to our fourth-quarter earnings per share as well as meet the profitability goals we set for next year."

Oracle's third-quarter GAAP (Generally Accepted Accounting Principles) total revenues were up 17 percent to $6.4 billion over 2009, while non-GAAP total revenues were up 18 percent to $6.5 billion.

New licensing revenue from database and middleware products improved by 13 percent, Epstein said.

CEO and co-founder Larry Ellison told conference call listeners that the company continues to snare "huge chunks of market share" from Germany-based rival SAP.

"SAP's products are fraying around the edges," Ellison said. "They're running on 25-year-old code. Our products beat them in so many ways."

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