Oracle Stockholders Get Early Holiday Present with Record Earnings
Less than a year after acquiring money-losing Sun Microsystems in an edgy $7.4 billion deal, Oracle appears to have shrugged off any doubts that it has indeed become the highly profitable, complete IT systems juggernaut it set out to be.
The Redwood City, Calif.-based enterprise hardware and software giant dazzled Wall Street, investors and industry analysts by posting impressive second-quarter fiscal year 2011 numbers that included a near-50 percent increase in total revenue over Q2 2009 and a record 33 percent increase (to 51 cents) in non-GAAP earnings per stock share.
Oracle reported $8.6 billion in total revenue for the quarter, up 47 percent from a year ago, and profits were up 28 percent. New software license revenues were up 21 percent to $2.0 billion, software license updates and product support revenues were up 12 percent to $3.6 billion, and non-GAAP software license updates and product support revenues were up 12 percent to $3.7 billion.
The company's hardware business took in $1.1 billion, hardware services totaled $686 million, and software services brought in $1.2 billion-up 24 percent over 2009.
Oracle stock was up 4 percent at $31.44 in after-hours
trading. The company's conference call was held one hour after the market
CEO and co-founder Larry Ellison, who took his usual shots at marketplace competitors Hewlett-Packard and SAP by deriding their hardware and software products as either slow or obsolete, said that the "pipeline" for the company's new Java-based Exadata database server has doubled in the last eight months to nearly $2 billion-indicating the amount of potential sales revenue in the coming 12 months.
Exadata a 'nice turbocharger' for license sales
"We think Exadata is going to be a nice turbocharger for our overall database license business," Ellison said. "We are taking share from Teradata, from IBM [P7] and HP Superdome [with it]."
Ellison described Exadata as "the fastest database server in the world, as the benchmarks continue to show. It can do 30 million transactions per minute; IBM's P7 are competitive but can do only about 10 million, and HP's servers are way slower at 4 million [per minute]. We see a real market opportunity against HP here.
"The Exadata and Exalogic [application] servers will be driving a great deal of our new business in 2011. We continue to make our server products faster, more scalable and more secure all the time. I think you're going to see a significant jump in Exadata sales going from Q2 to Q3."
Former HP CEO Mark Hurd, who joined Oracle as co-president with Safra Catz last August, said he's been traveling a great deal during the quarter-including to OracleWorld conferences in Brazil and China-and sees a good reception in general for Oracle's new data center hardware and software.
"Since joining Oracle, I've met with and visited many customers that have expressed a high level of enthusiasm around our strategy of engineering hardware and software that works together," Hurd said. "That enthusiasm translates into an Exadata pipeline that has now grown to nearly $2 billion.
"That number is a good leading indicator that customers are planning to increase their investment in Oracle technology."