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Oracle Q4 Net Drops 7% by David R. Brousell • Sign up to receive ME Daily News Alerts • POSTED on Wednesday, June 24, 2009 5:33:14 PM |
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Due in part to the effect of a stronger U.S. dollar on current exchange rates, Oracle Corp. late Tuesday reported lower revenue and profit in its fourth fiscal quarter.
For the three months ended May 31, Oracle said, net income dropped 7% to $1.9 billion, or $0.38 per share, compared with $2 billion, or $0.39 per share in last year’s fourth quarter. Revenue fell 5% to $6.8 billion, from $7.2 billion. Wall Street analysts had expected revenue of $6.4 billion.
New license revenue from all software products declined 13% in the quarter to $2.7 billion, from $3.1 billion in the year-earlier period. Revenue from software license updates and product support grew 8% to $3 billion, from $2.8 billion, while services revenue declined 16% to $1 billion, from $1.2 billion.
New license revenue from applications software was $805 million, down 11% in constant currencies and 19% in real dollars, said Oracle Chief Financial Officer Jeff Epstein, during a conference call with financial analysts. The Americas region was particularly hard-hit, suffering a 22% decline, compared with 5% growth in the EMEA region and a drop of 4% in Asia.
For the full year, Oracle reported revenue of $23.2 billion, or $1.10 per share, up 4% from $22.4 billion, or $1.08 per share, in fiscal 2008 year. Net income rose 1% to $5.59 billion.
Oracle executives said they were pleased with the quarter’s results, given the exchange rate situation and the global economic downturn, and they expressed some confidence looking ahead.
“We’re obviously pleased with our Q4 results, “ said Oracle President Safra Katz, who noted that there has been a 16-point shift in currency translation rates over the past 12 months.
Charles Phillips, who also holds the title of Oracle president, said three major factors enabled Oracle to perform as it did in the quarter: a sales force that did not get distracted by the downturn, a diverse product line, and a sales pipeline “that is growing faster than reported revenue.”
Nevertheless, Katz issued sober guidance for the company’s first fiscal quarter. She said that total revenue will be down 1% to 4% year over year, with earnings per share in the range of $0.29 to $0.31. New software license revenue for all products, she said, will be down 4% to 14%.
During the call with financial analysts, Oracle Chief Executive Larry Ellison focused on touting the company’s new Exadata Database Machine, calling it the “most successful and exciting new product” in Oracle’s 30-year history. Asked by analysts about Oracle’s plans for its on-demand software business, Ellison said the goal is to be the number one applications software company in the world in both on-demand and on-premise applications. “We can be very competitive versus Salesforce.com” now, he said, noting that Oracle is “code complete” on a set of new Fusion applications that will be announced later this year and delivered next year. Ellison said the new Fusion applications are “on-demand-ready.”
He also said he expected the on-demand business to grow somewhat faster than on-premise, and that there would be a “gradual shift” to the on-demand model over the next decade. Oracle has three options for companies, he said: on-demand applications hosted in Oracle’s data center, on-premise applications, and on-demand software hosted in a user’s data center but run by Oracle.
“That’s where the real value is,” Ellison said, referring to the hybrid on-demand/on-premise model.
Separately this week, Oracle rolled out a new version of its Agile Product Lifecycle Management platform that includes new integration capabilities as well as pre-packaged analytics that let manufacturers understand risks associated with new product designs or design changes.
Agile PLM 9.3 includes a new set of Web services, extensible scripting, and event management services that make it easier for manufacturers to integrate the Agile platform with a wide range of legacy design tools and enterprise systems.
Previously, Oracle had created specific integrations between Agile and prominent design tools such as those from Siemens UGS. The new Web services allow users to integrate Agile PLM 9.3 with a wider range of legacy packaged or homegrown design and enterprise applications.
The latest Agile offering also includes an integrated version of Oracle’s Product Master Data Management tool, which can be used to improve data quality and data governance and to manage data mappings between design applications.
Agile 9.3 also includes new out-of-the-box analytics that enable manufacturers to understand supply chain and other risks related to product designs or design changes, the company said. The analytics, based on Oracle Business Intelligence Enterprise Edition tools, allow manufacturers to understand the risk of obsolescence or poor quality that may be associated with specific parts designed into a new product, for example.
Also new to Agile PLM 9.3 is a redesigned user interface, based on Web 2.0 principles and techniques, that allows for personalization of user interfaces as well as features such as context-aware pop-ups.
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