Sales were $8.6 billion, helped mostly by new software license sales that grew 21 percent to $2 billion, while updates and product support revenue grew 12 percent to $3.7 billion. The consensus estimate was $8.34 billion. Sales grew 47 percent from the same period a year ago.

Non-GAAP per-share earnings were 51 cents, beating the 46-cent forecast estimate of analysts surveyed by Thomson Financial. Earnings after one-time items were 37 cents, up from 29 cents a year ago.

Gross margins on Sun-branded hardware increased to 53 percent.

Shares are up almost 4 percent in after-hours trading.

There’s a quote from CEO Larry Ellison, reminding us how fast his new products are, and digging once again at the competition:

“Sun’s new SPARC Supercluster computer shattered the world record for database transaction processing performance by running 3 times faster than IBM’s fastest computer, and a stunning 7.5 times faster than HP’s best ever database performance,” said Oracle CEO, Larry Ellison. “Our new generation of Exadata, Exalogic and SPARC Supercluster computers deliver much better performance and much lower cost than the fastest machines from IBM and HP.”

Here’s another quote, from Oracle co-President (and former HP CEO) Mark Hurd, about the Exadata product line:

“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,” said Oracle President, Mark Hurd. “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.”

Yes I would say there’s enthusiasm. It was precisely because of the Exadata line that Macquarie Research upgraded Oracle today.

More from the conference call, which starts at 5 pm ET.

4:53 pm: Seven minutes to go before the Oracle earnings conference call starts. Right now it’s all mellow classical guitar.

Call is running a little late.

5:10 pm: And we’re underway with the safe-harbor statement.

Ellison, Hurd and president Safra Catz are on the call.

Americas grew 32 percent in U.S. dollars.

5:15 pm: Balance sheet: $24.8 billion in cash and short-term investments.

Generated $3.7 billion in free cash flow.

5:15 pm: Safra Catz is now speaking. We exceeded the high point of license guidance. Even excluding a payment for legal fees, we beat guidance by 4 cents.

5:16 pm: All geographies reported double-digit growth.

5:16 pm: “We continue to take share from SAP.”

5:17 pm: With Sun, included operating margins were 44 percent, which is better than SAP. [Another dig.]

5:18 pm: Hardware guidance: $1.1 to $1.2 billion in revenues.

Non-GAAP EPS expected to be 48 to 50 cents, and 34 to 36 cents on a GAAP basis.

Here’s Larry:

5:19 pm: Our goal is to be No. 1 in high-end market for servers. Right now our numbers are behind HP and IBM.

5:20 pm: IBM’s and HP’s servers are slow, and software is slow and expensive and have no software value-add. [Another dig at the competitors.]

5:22 pm: Exadata pipeline continus to grow. We expect our new generation of Sun machines will enable us to win significant share, and position us in the No. 2 position behind IBM very soon. And then we’ll fight it out for No. 1.

5:23 pm: Now Mark Hurd is speaking.

5:23 pm: I want to focus on our opportunities to grow significantly.

5:24 pm: Deal volume was spread across companies of all sizes and strength in the public sector as well.

5:24 pm: All of our customers and competitors are reacting to us.

5:25 pm: 150,000 Middleware customers. We ended the quarter with a record hardware backlog.

5:26 pm: Now going to Q&A:

A question from UBS. Are you starting to see a halo impact on adoption of the Oracle suite?

Larry: Close rates are improving. You’ll see great improvement in Exadata sales from Q2 to Q3. Because it’s new, people were running a lot of benchmarks and trying it out first. We’ll sell a lot more Exadata in Q3 than in Q2.

As for the halo effect, when you buy these servers you buy them to run specific software. Engineer them at the same time and make sure they run well together. We have a huge advantage over IBM and HP. The notion of systems, hardware and software that run well together will dominate the high end of the business.

Q: You clearly have a lot of irons in the fire with Fusion apps coming up and Exadata. Focus on Exalogic. Can you share early feedback from customers and compare that to Exadata ramp.

Mark: Exadata experience benefits Exalogic. We’ve matured the use case, we think we know where the targets are. The Exadata experience is a big deal for us.

5:31 pm: A question about Fusion Middleware.

Larry: We’ve been in the middleware business for a long time. With release 11 everything has been rewritten. It’s a much better user experience, you can patch our entire suite with a single file. We think the fact that we have an integrated suite gives us a huge advantage over IBM.

5:33 pm: A question about Europe. It was better than expected. Apps business was really strong. Look at competitors. You’ve been gaining share against SAP. We are seeing a pickup in general environment.

Hurd: I’m not an economist, but we’re doing well in Europe. It was broad-based. It was not singular to a deal or country. It was broad-based to countries where we have been gaining share. It’s been one quarter after another, a pretty steady beat.

Larry: We had a wonderful set of industry specific applications, in telecommunications and banking and retail, and that’s unique vis-a-vis SAP. that has helped us a lot to establish us in a lot of industries. Also Fusion is right around the corner.

5:35 pm: Q: How frequently is an Exadata deployment resulting in the displacement of a competitor’s product?

Hurd: About 70 to 75 percent of the time. About 20 to 25 percent of the time it’s a consolidation.

We’ve sold Exadata now in 50 countries, and 30 to 35 percent of our customers have made a second purchase. You’re starting to see repeat purchases. We’ve learned a lot about this and so as we launch Exalogic we can accelerate our learnings.

5:36 pm: Q: Margin was also great. What can we expect going forward and what were one-time items?

Catz: In general, it’s the business. The only nonrepeatable thing is the $120 million legal settlement, which we will not repeat. Hardware margins and operating margins, this is something we’ve done for many years.

5:38 pm: Q: What is visibility for database licenses?

Larry: A couple quarters ago, someone noticed database licenses were growing nicely. We think Exadata is going to be a nice turbocharge to our database business. Across the board our database business is going to get strong with Exadata.

I just looked at after-hours trading in Oracle shares and they’re up more than 4.5 percent.

Hurd: “The secret to Exadata is bringing the smarts to the data, versus bringing the data to the smarts.”

5:42 pm: Q: What continues to drive the database business? Is it just core database, add-ons?

Larry: We think our technology is getting faster and more reliable at a faster rate than that of our competitors.

5:43 pm Larry: As far as applications, we think there are lots of reasons we continue to gain share every quarter over the last few years over SAP.

It’s the industry-specific applications. We have telecom companies that are running only Oracle software. We have some banks that are making the same kind of commitments up and down the stack. SAP just doesn’t have that.

5:44 pm: Larry: We’ve got this extremely modern Java-based suite called Fusion that is going to strengthen our competitive stance against Salesforce.com and against Workday.

5:46 pm: That seems to be it. The call is concluded.

When Apple (AAPL) last updated the agreement, in April, the following text was added to section 3.3.2.

No interpreted code may be downloaded or used in an Application except for code that is interpreted and run by Apple’s Documented APIs and built-in interpreter(s).?

This text banned cross-compilers like Adobe’s (ADBE) Flash-to-iPhone utility, which would have allowed apps written in Flash to run on the iPhone. But the change also seemed to restrict the use of interpreted languages like Lua, which figure prominently in games like Tap Tap Revenge. Now Apple has tweaked the restriction, adjusting it to permit the use of interpreted code, provided it is used only for minor features and with Apple’s written consent. Here’s the updated text:

Unless otherwise approved by Apple in writing, no interpreted code may be downloaded or used in an Application except for code that is interpreted and run by Apple’s Documented APIs and built-in interpreter(s). Notwithstanding the foregoing, with Apple’s prior written consent, an Application may use embedded interpreted code in a limited way if such use is solely for providing minor features or functionality that are consistent with the intended and advertised purpose of the Application.??

So, a small change but a significant one. Cross-compilers, Flash and middleware platforms are still forbidden, but–with Apple’s explicit blessing–popular game engines or libraries like Lua and Unity 3D are not.

The European Commission this morning unconditionally approved Oracle’s proposed acquisition of Sun Microsystems, removing one of the last hurdles to the $7.4 billion deal. Digital Daily reported Monday that people close to the companies expected the EC to clear the deal by today.

“I am now satisfied that competition and innovation will be preserved on all the markets concerned,” European Competition Commissioner Neelie Kroes said in a statement. “Oracle’s acquisition of Sun has the potential to revitalize important assets and create new and innovative products.”

All that remains in the planned merger’s way now is approval from Chinese and Russian antitrust authorities, and Oracle (ORCL) expects them both to clear it unconditionally. That being the case, the company has scheduled an event to discuss its strategy for absorbing Sun (JAVA) for the morning of Jan. 27. CEO Larry Ellison will host the event, which will be Webcast live from 9 am to 2 pm Pacific Time.

The EC’s full statement, below.

Mergers: Commission clears Oracle’s proposed acquisition of Sun Microsystems

The European Commission has approved under the EU Merger Regulation the proposed acquisition of US hardware and software vendor Sun Microsystems Inc. by Oracle Corporation, a US enterprise software company. After an in-depth examination, launched in September 2009 (see IP/09/1271 ), the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Competition Commissioner Neelie Kroes said: “I am now satisfied that competition and innovation will be preserved on all the markets concerned. Oracle’s acquisition of Sun has the potential to revitalise important assets and create new and innovative products.”

Oracle is a supplier of business software, including middleware (i.e. software that connects software components applications), database software, enterprise application software and related services.

Sun provides network computing infrastructure solutions that include computer systems, software, storage and services. In 2008, Sun acquired the open source database, MySQL.

The Commission’s in-depth investigation, opened on 3 September 2009 assessed whether the acquisition of the world’s leading open source database MySQL by Oracle, the leading proprietary database vendor, would lead to a significant impediment of effective competition within the EEA. The database market is highly concentrated with the three main proprietary database vendors – Oracle, IBM and Microsoft – accounting for approximately 85% of the market in terms of revenue.

Although Sun’s share of the database market in terms of revenue is low, as users of MySQL can download and use the database for free, given its open source nature, the Commission’s investigation confirmed MySQL’s position as the leading open source database. The Commission’s investigation therefore focussed on the nature and extent of the competitive constraint that MySQL currently exerts on Oracle and whether this would be affected by the proposed transaction.

The Commission’s in-depth investigation showed that although MySQL and Oracle compete in certain parts of the database market, they are not close competitors in others, such as the high-end segment.

Given the open source nature of MySQL, the Commission also assessed Oracle’s ability and incentive to remove the constraint exerted by MySQL after the merger and the extent to which this constraint could, if necessary, be replaced by other actors on the database market.

The Commission’s investigation showed that another open source database, PostgreSQL, is considered by many database users to be a credible alternative to MySQL and could be expected to replace to some extent the competitive force currently exerted by MySQL on the database market. In addition, the Commission found that ‘forks’ (branches of the MySQL code base), which are legally possible given MySQL’s open source nature, might also develop in future to exercise a competitive constraint on Oracle in a sufficient and timely manner. Given the specificities of the open source software industry, the Commission also took into account Oracle’s public announcement of 14 December 2009 of a series of pledges to customers, users and developers of MySQL concerning issues such as the continued release of future versions of MySQL under the GPL (General Public Licence) open source licence. Oracle has already taken action to implement some of its pledges by making binding offers to third parties who currently have a licensing contract for MySQL with Sun to amend contracts. This is likely to allow third parties to continue to develop storage engines to be integrated with MySQL and to extend the functionality of MySQL.

The Commission also examined the potential impact of Oracle’s acquisition of the intellectual property (IP) rights connected to the Java development platform in the context of the proposed transaction.

It found that Oracle’s ability to deny its competitors access to important IP rights would be limited by the functioning of the Java Community Process (JCP) which is a participative process for developing and revising Java technology specifications involving numerous other important players in the IT industry, including Oracle’s competitors.

The Commission also found that Oracle would not have the incentives to restrict its competitors’ access to the Java IP rights as this would jeopardise the gains derived from broad adoption of the Java platform and therefore the proposed transaction would raise no competition concerns in respect of the licensing of IP rights connected with Java.

The Commission also examined the potential effects arising from the proposed transaction on the market for middleware and in the ‘IT stack’, where the merger would strengthen Oracle’s presence. It concluded that no competition concerns would arise in these areas in the light of the merged entity’s market shares and prevailing competition in the markets.

“The commission has endorsed the local sale of the iPhone and the launch of its service within the limits of the law,” said Lee Tae-hee, a spokesman of the Korea Communications Commission. “If Apple includes location based-related details as a form of an agreement to its strategic partners such as KT, Apple’s iPhone can give location-related services here.”

Great news for Apple (AAPL). The South Korean market is a robust one, and analysts say that with the right carrier partner, Cupertino could be looking at sales over the first year ranging from 500,000 to two million. That said, they note that competing with the likes of Samsung and LG on their home turf won’t be easy. Between them, they control about 70 percent of the South Korean handset market.

“There seem to be a lot of people waiting for iPhones to go on sale here but it will not be easy for Apple to crack the Korean market as Samsung and LG already dominate the market with competitive phones,” said Jae Lee, analyst at Daiwa Securities in Seoul. “It will be difficult for Apple to steal market share significantly from the Korean makers in the short term but the iPhone could still be a threat to Samsung and LG in the long term.”

When the iPhone finally does arrive at market in South Korea, it will likely be with KT (formerly known as Korea Telecom) as a carrier partner. As Dan Butterfield over at iPhonAsia notes, KT CFO Yeon-hak Kim suggested as much this past summer. “Apple iPhone will be in our smartphone line-up,” he said in August. “iPhone will help to expand the smartphone market and will contribute to increasing the ARPU (average revenue per user).”

KT officials are telling the Korea Times that they’re looking at a November launch date. “KT has been in talks with Apple to introduce iPhones,” said a KT official. “Sometime in November, the latest iPhone model dubbed as ‘iPhone 3GS’ and its previous model will be commercialized. KT and Apple will decide on the coverage of location-based services.”

Clearly, Oracle’s acquisition binge strategy, which has provided it with more customers and more recurring revenue, has proven a wise one. No surprise, then, that Ellison said the company continues to look for takeover targets. “Some companies have much more attractive valuations right now but I’m not sure they’d be wildly enthusiastic about selling for cash at this point in time,” he said. “So we’re going to wait and see how things play out and we’re looking at a number of small acquisitions in the vertical areas and some potential opportunities for a large company acquisition if the price is right.”

On April 1, 2009, that will all change. The Korea Communications Commission today agreed to lift the WIPI requirement, opening the South Korean market to the iPhone, BlackBerry and other devices to which it had been effectively closed. “Mobile-phone operators have been required to use the WIPI mobile platform on their handsets, but considering global industry trends toward the use of general-purpose mobile operating systems, we concluded that there was a need to allow carriers the freedom to decide whether to use WIPI or not,” Shin Yong-sub, the director of KCC’s policy bureau, told the Korea Times. “Consumers will also be able to choose from a wider variety of products and benefit from increased price competition from handset makers.”

Top among those products, the iPhone, which carriers K Telecom and KTF are both said to be interested in adding to their lineups.

On April 1, 2009, that will all change. The Korea Communications Commission today agreed to lift the WIPI requirement, opening the South Korean market to the iPhone, BlackBerry and other devices to which it had been effectively closed. “Mobile-phone operators have been required to use the WIPI mobile platform on their handsets, but considering global industry trends toward the use of general-purpose mobile operating systems, we concluded that there was a need to allow carriers the freedom to decide whether to use WIPI or not,” Shin Yong-sub, the director of KCC’s policy bureau, told the Korea Times. “Consumers will also be able to choose from a wider variety of products and benefit from increased price competition from handset makers.”

Top among those products, the iPhone, which carriers K Telecom and KTF are both said to be interested in adding to their lineups.

On April 1, 2009, that will all change. The Korea Communications Commission today agreed to lift the WIPI requirement, opening the South Korean market to the iPhone, BlackBerry and other devices to which it had been effectively closed. “Mobile-phone operators have been required to use the WIPI mobile platform on their handsets, but considering global industry trends toward the use of general-purpose mobile operating systems, we concluded that there was a need to allow carriers the freedom to decide whether to use WIPI or not,” Shin Yong-sub, the director of KCC’s policy bureau, told the Korea Times. “Consumers will also be able to choose from a wider variety of products and benefit from increased price competition from handset makers.”

Top among those products, the iPhone, which carriers K Telecom and KTF are both said to be interested in adding to their lineups.

If we maintain our trajectory and IBM maintains their trajectory, we could pass them as early as the end of this year or certainly next year to be the No. 2 player in middleware.”

–Oracle CEO Larry Ellison, Sept. 21

Carl Icahn’s recent appeals to BEA Systems management to discuss a possible sale of the company seem to have set Oracle’s salivary glands flowing. This week the CRM gourmand made an unsolicited $6.66 billion bid for the business-management software maker.

In a letter to BEA’s board Tuesday, Oracle offered $17 a share for BEA–a 25% premium over BEA’s closing stock price yesterday. “We believe our all-cash offer provides the best value for BEA’s shareholders and the best home for BEA’s employees and customers,” said Oracle President Charles Phillips. “This proposal is the culmination of repeated conversations with BEA’s management over the last several years. We look forward to completing a friendly transaction as soon as possible.”

We’ll have to see about that. According to Kevin Faulkner, BEA’s senior vice president of investor relations, the company’s not for sale. ‘Course, PeopleSoft CEO Craig Conway said the same thing back in 2003 and look how that turned out.

Anyway, if Tuesday’s offer leads to a deal, Oracle will have spent some $28 billion on acquisitions–33 of them–in the last three years or so. A vast sum, but one apparently well spent. The company’s recent purchases have been widely credited for a 26% spike in earnings in its latest fiscal year and for a 91% increase in its stock price since November 2005. If things continue along that way, we may see Larry Ellison’s IBM prediction come to pass sooner, rather than later.

I’m worried, Larry … I think it’s imperative that we start to budget and plan.”

–Oracle CEO Larry Ellison’s accountant Philip Simon

Looks like Larry Ellison’s long-suffering accountant won’t have to reach for the Mylanta next time the mercurial CEO maxes out his more-than-a-billion-dollar credit limit. Yesterday Oracle reported surprisingly strong growth in what is traditionally its weakest quarter of the year. The company’s fiscal first-quarter profit grew 25%, easily besting Wall Street analysts’ expectations. This despite the summer’s nauseating market turbulence. And according to Ellison, this kind of financial success isn’t an anomaly, but a trend and one that will continue to keep Oracle growing faster than competitors like IBM.

“We’re doing very well against them,” Ellison said, referring to IBM.

So well, in fact, that it’s threatening to overtake the company as the No. 2 middleware provider.

“We’re growing dramatically faster than our competitors, and our target really is to beat IBM,” Ellison said. “If we maintain our trajectory and IBM maintains their trajectory, we could pass them as early as the end of this year or certainly next year to be the No. 2 player in middleware.”

I’m worried, Larry … I think it’s imperative that we start to budget and plan.”

–Oracle CEO Larry Ellison’s accountant Philip Simon

Looks like Larry Ellison’s long-suffering accountant won’t have to reach for the Mylanta next time the mercurial CEO maxes out his more-than-a-billion-dollar credit limit. Yesterday Oracle reported surprisingly strong growth in what is traditionally its weakest quarter of the year. The company’s fiscal first-quarter profit grew 25%, easily besting Wall Street analysts’ expectations. This despite the summer’s nauseating market turbulence. And according to Ellison, this kind of financial success isn’t an anomaly, but a trend and one that will continue to keep Oracle growing faster than competitors like IBM.

“We’re doing very well against them,” Ellison said, referring to IBM.

So well, in fact, that it’s threatening to overtake the company as the No. 2 middleware provider.

“We’re growing dramatically faster than our competitors, and our target really is to beat IBM,” Ellison said. “If we maintain our trajectory and IBM maintains their trajectory, we could pass them as early as the end of this year or certainly next year to be the No. 2 player in middleware.”