Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Oracle Falls Short on Weak Software Sales

Software giant Oracle reported quarterly results that fell short of the expectations of analysts, as licenses for new software rose only slightly and sales were $430 million below what analysts had forecast. Hardware sales were down by 14 percent year on year. Revenue from software license updates and product support revenues were $4 billion, up 9 percent.

The company reported a profit of 54 cents per share on $8.8 billion. The results fell short of the consensus view that Oracle would report sales of $9.23 billion and a per-share profit of 57 cents. Oracle shares, which had risen by 56 cents, or 2 percent, during the regular trading session, to close at $29.17, fell sharply in after-hours trading. As of 4:15 pm ET, Oracle shares were trading down $1.72, or 6 percent, on the news.

In the plus column, Oracle said its operating margin on a non-GAAP basis improved to 45 percent, and that it expects those margins to keep rising. Operating cash flow grew by 45 percent, as well, to $13.1 billion.

The company boosted its salesforce by 1,700 during the first half of the year, in an effort to boost sales of its Enterprise Resource Planning and Customer Relationship Management software products. Co-President Mark Hurd said the additional sales personnel should help sales improve in the second half of the fiscal year. (The quarter was Oracle’s fiscal second.)

The company said its board of directors approved a $5 billion share buyback and a 6-cent-per-share dividend.

CEO Larry Ellison said in a statement that sales of so-called engineered systems — essentially hardware that contains a lot of exclusive Oracle technology — surged versus the year ago period. Sales of Exadata database hardware and Exalogic servers both grew by 100 percent, he said. He also said that Oracle shipped its first SPARC SuperCluster during the quarter, and expects to commence deliveries of Exalytics Business Intelligence machines this quarter.

Oracle’s statement is below. I’ll be adding more to this post as I go through the press release, and will call out some highlights. The company is hosting a conference call shortly.

(The pitch-perfect image of the Team Oracle plane doing a dive during San Francisco’s Fleet Week was taken by Ingrid Taylar for About.com.)

Oracle Reports Q2 GAAP EPS Up 17% to 43 Cents; Q2 Non-GAAP EPS Up 6% to 54 Cents

Trailing Twelve Month Operating Cash Flow Up 45% to $13.1 Billion

REDWOOD SHORES, CA–(Marketwire -12/20/11)- Oracle Corporation (NASDAQ: ORCL – News) today announced fiscal 2012 Q2 GAAP and non-GAAP total revenues were up 2% to $8.8 billion. Both GAAP and non-GAAP new software license revenues were up 2% to $2.0 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 9% to $4.0 billion. Both GAAP and non-GAAP hardware systems products revenues were down 14% to $953 million. GAAP operating income was up 12% to $3.1 billion, and GAAP operating margin was 35%. Non-GAAP operating income was up 3% to $3.9 billion, and non-GAAP operating margin was 45%. GAAP net income was up 17% to $2.2 billion, while non-GAAP net income was up 6% to $2.8 billion. GAAP earnings per share were $0.43, up 17% compared to last year while non-GAAP earnings per share were up 6% to $0.54. GAAP operating cash flow on a trailing twelve-month basis was $13.1 billion.

“Non-GAAP operating margins increased to 45% in Q2,” said Oracle President and CFO, Safra Catz, “and we expect those margins to keep growing. Operating cash flow over the last twelve months grew to $13.1 billion; that’s up a remarkable 45% compared to the preceding twelve month period.”

“We have expanded our worldwide sales capacity by adding over 1,700 sales professionals in the first half of this fiscal year,” said Oracle President, Mark Hurd. “We believe that this increase in our field organization combined with innovative new products like Fusion Cloud ERP and Cloud CRM will enable solid organic growth in the second half of this year.”

“Sales of our engineered systems accelerated in Q2,” said Oracle CEO, Larry Ellison. “Exadata growth was well over 100% compared to last year, and Exalogic grew more than 100% on a sequential basis. We shipped our first SPARC SuperCluster in Q2 and expect to begin deliveries of our Exalytics system and the Oracle Big Data Appliance in Q3.”

Oracle announced that its Board of Directors authorized the repurchase of up to an additional $5.0 billion of common stock under its existing share repurchase program in future quarters.

The Board of Directors also declared a quarterly cash dividend of $0.06 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 11, 2012, with a payment date of February 1, 2012.


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