In a conference call yesterday, CFO Safra Catz blamed the problems on issues with sales execution, due in part to all the sales people Oracle has hired in recent months: “Since we’ve been adding literally thousands of new sales reps around the world, the problem was largely sales execution, especially with the new reps, as they ran out of runway in Q3,” Catz said on the call. “As expected, many of the pushed out deals have already closed.”

Analysts today seemed willing to take that explanation at face value. “While the sales execution excuse is hardly bulletproof, we side with Oracle on this one and conclude that the issues are largely internal and can be addressed relatively quickly,” wrote BMO Capital Markets analyst Karl Keirstead in a note to clients today. “We haven’t picked up signs of a February lull in enterprise IT spend.”

Brad Reback of Stifel Nicolaus agreed. “We think the issue was not macro, competitive or product related, but due to training and productivity issues with new sales hires and their inability to close enough ‘bread and butter’ deals,” he wrote in a note today.

However, it’s hard to gauge how much of today’s decline is the result of the quarter’s results, and how much can be attributed to chatter that Oracle President Mark Hurd might, in one scenario, be tapped to run Dell.

Yesterday, Fortune reported that the private equity firm Blackstone Group is mulling a competing bid against Silver Lake Partners and Michael Dell to take that struggling computer company private. In the event that Blackstone were to win the bidding process, it would, the story goes, want Hurd for the CEO job there.

Hurd, whose previous job was running Hewlett-Packard, where he earned a reputation as an aggressive cost-cutter, hasn’t signaled his interest in such an outcome either way. But today The Wall Street Journal reported that Blackstone was in talks with GE concerning a bid on Dell’s financial services unit, meaning that the chatter about Hurd running a Blackstone-owned Dell might be just that — chatter.

Asa Mathat / AllThingsD.com

The results were better than expected. Earnings on a per-share basis were 64 cents, three cents above the consensus of 61 cents. Sales were $9.11 billion, beating the consensus estimate of $9.03 billion.

As usual, we’ll be listening for hints from Oracle on the state of overall IT spending, which could have important implications for other companies, including Hewlett-Packard, SAP and IBM.

Also, though much of Oracle’s corporate legal dramas with HP and Google have quieted for now, it’s possible that CEO Larry Ellison will have some colorful words about his various competitors.

Update: The call is now over and you can read my abbreviated transcript below. (Sorry, I joined late.) A few highlights: President Mark Hurd declared that Oracle plans to hire more sales people, and to do so fairly aggressively. Ellison reminded the analysts on the call that the surge in hiring has been done without adding much to the expenses. CFO Safra Catz said that sales to federal customers are healthy despite the worries about the federal budget’s “fiscal cliff” that is looming at the end of the year.

2:18 pm: Joining late after a technical foul-up. The Q&A session has already started.

2:19 pm: Question from Merrill Lynch about growth rates of Exadata. Are you tracking closer to the billion-dollar run rate? Also, any changes in customer behavior in regards to the fiscal cliff?

President Mark Hurd: We’re changing nothing. Generally speaking, that’s the trajectory we’re on.

CFO Safra Catz: We’re having a wonderful December so far. People are wanting to spend their budgets. I can tell you our federal customers have been spending money with us even in December.

Question from Wells Fargo: Sales performance and productivity. There were changes in headcount and software licensing. Curious about productivity ramping for net new hires and heading into Q4.

Hurd: Without making too many forward-looking statements, in general we feel great. We’re hiring the best people in the industry and getting them ramped and oriented to sell and beat competition. We’ve lined up our sales force against the secular competitors and trained them to be experts in their products. We don’t expect them to be very productive for the first twelve months. If they are productive, that’s gravy. We feel great about the talent we’re attracting and we feel great about getting them inside. And we’re still hiring.

CEO Larry Ellison pipes up: We’re also hiring in BI (Business Intelligence).

Ellison: Mark and his team have done an extraordinary job of ramping the sales force without increasing the cost. We’ve kept expenses pretty close to flat. We’re going to keep doing that for the next 18 months. We’re going to add to capacity without adding expense.

Question from Goldman Sachs: Given all the enhancements you’ve made with Fusion, can you speak to attach rates of add-ons? Also, given successes you’re seeing in the cloud subscription line, how does that affect the growth rates?

Hurd: Our attach rate, we look at it over a number of years. In the quarter, we had a significant number of logos where we closed a module. It’s a core part of our strategy. (He’s talking about selling additional software modules that work with different software apps.)

Here’s one key bit of news that occurred before I joined the call: “Oracle said it expects new license software revenue growth in the range of 4 percent to 14 percent on constant currency basis and 3 percent to 13 percent in reported dollars. Hardware product revenue growth is expected to range from a negative 10 percent to flat in constant and reported dollars.”

Question about a year-end budget flush.

Catz: Folks wanted to close deals in November and they want to close deals in December. No impact on pricing.

2:30 pm: Ellison is speaking a bit about Oracle 12c and the cloud. He mentioned Salesforce.com as a customer. He says it’s also appropriate for customers building private clouds. The key feature he says is that 12c moves multi-tenancy into the database layer.

Catz: Our customers who are paying for license updates are entitled to the product. Over time they will update to it over a number of years. It will make us more competitive.

Hurd: We had good solid growth in every region in the database business.

Final question from Stifel Nicolaus: Give us some color on increases in coverage in vertical businesses.

Hurd: We put a lot of effort into our verticals. Those are discussions we’re having at the CEO level. The implications are huge. We’ve invested a lot of R&D. We feel great about our position in communications, and in retail. We’ve made big investments in financial services, not just in product, but scaling out the sales force.

And that wraps up the call.

Asa Mathat / AllThingsD.com

The filing shows that while Ellison took a token $1 salary, his combined compensation from stock options and other items for the year jumped by 24 percent year on year to north of $96 million from $77.6 million in 2011. Ellison’s compensation package included about $90 million worth of stock options, an $8.4 million $3.9 million incentive payment that was only half one-quarter as large as the maximum allowed under the bonus plan, and a $1.5 million payment for security at his home. Most of the increase can be attributed to the value of the options for 7 million shares that Ellison received. He received the same amount of options last year, and they’re simply worth more this year.

Ellison, the company’s founder, who has run it since 1977, already owns more than 23 percent of the outstanding equity in Oracle, amounting to more than 1.1 billion shares. As of Friday’s closing price, his stake in the company is worth more than $37 billion.

Catz, Oracle’s president and CFO, received a 23 percent raise in total compensation. Oracle reported her combined compensation in salary, stock options and other payments as $51.7 million, up from $42.1 million the year before, including options awards worth more than $48.3 million, and an annual base salary of $950,000. She owns a stake in the company amounting to more than 23.5 million shares, which, as of Friday’s closing price, is worth more than $763 million.

Hurd, who joined the company in 2010 after leaving Hewlett-Packard, where he was CEO, saw his total compensation for the year drop to $51.7 million from $78.4 million the year before. The decrease is because of a big one-time bonus in stock-option grants that Oracle gave him when he joined. His base salary is equal to Catz’s, at $950,000, and also included $48.3 million worth of stock options. Hurd owns 5.4 million shares in the company, which, as of Friday, was worth north of $176 million.

Hurd and Catz also each received a $2.4 million incentive payment out of a possible $10.4 million.

The compensation was for Oracle’s fiscal year 2012, which ended May 31, a period during which the company’s share price fell by 19.5 percent, annual revenue rose by 4.2 percent, and net profits rose by 16.8 percent.

Fortune magazine put out its “50 Most Powerful Women in Business” list today, which was topped by IBM CEO Ginni Rometty.

The nod to the leader of the longtime tech giant was followed by Hewlett-Packard CEO Meg Whitman at the No. 3 slot, Facebook COO Sheryl Sandberg at No. 8 and Oracle president and CFO Safra Catz at No. 10.

But it was — shockeroo — media magnet Marissa Mayer who claimed the very elegant solo photo on the cover (though it is from last year), as well as the No. 14 slot. She is also the youngest woman on the list, at 37 years old.

Mayer — the former Google exec whom Fortune correctly characterized as having been “somewhat marginalized” after 13 years at the search giant in its write-up — took over the troubled Yahoo in July. Since then, she has been making a series of dramatic cultural changes at the Silicon Valley Web icon as she preps for the more structural ones to come soon (and perhaps even before her first child is due in early October).

Other tech stars on the list include Google SVP Susan Wojcicki and IBM SVP Bridget Van Kralingen.

The most interesting part of the list, perhaps, is the fall of media giant Oprah Winfrey, who Fortune said “is the only woman with a spot on this list since its inception.” She is now in dead last at No. 50.

Speaking of marginalizing –ouch!

Fortune also has its annual big conference coming up that is linked to the well-known list. It takes place in early October and is run by longtime editor-at-large Pattie Sellers, who is co-chair of the Fortune event, called the Most Powerful Women Summit.

Earlier this month, the company surprised analysts by reporting quarterly results that were better than anyone expected, and with the revelation that Oracle is now the second-largest provider of software-as-a-service after Salesforce.com, it has challenged the conventional wisdom that it was more of an old-school software company.

But that’s not the most interesting thing I noticed in looking over Oracle’s most recent financials. I saw that a lot of operating expenses were lower — $174 million lower, to be exact — in Oracle’s fiscal 2012 versus fiscal 2011. It looked to me like the Mark Hurd playbook is alive and well. It was the first thing that came to mind when I sat down with the Oracle president (and former CEO of both Hewlett-Packard and NCR) at Oracle’s offices in New York for his second on-the-record interview (here’s the first) with AllThingsD. A transcript of our conversation is below:

AllThingsD: Mark, Oracle had a pretty good quarter, when people expected it to be tougher. Software sales are up, hardware is down. But when I went back and looked at the results, I saw something that looked familiar: Shrinking expense lines in things like marketing and general and administrative. I thought that looked a bit like the old Mark Hurd playbook from HP, and NCR before that. Is that part of what’s going on?

Mark Hurd: I think it was a good quarter for us. The quarter behaved well across virtually every metric. Our pipelines were up. Our conversion rates, which is our ability to convert pipeline into orders, was strong. I think, to your point, we managed our expenses. I think, in the context, if you look at the quarter, we added 3,300 people to our sales organization. And those are really the quota-carrying people, plus the technical people who support the sales people. And we did that while keeping our sales and marketing expenses relatively flat year over year. I think anytime you can realign your capital so you can get it into R&D, or into sales, as we have, it tends to show up. We’ve got more opportunities than we can deal with right now, so we had to increase, and it’s a great thing for us.

And that increase is taking place at a time when some people expected you to cut back. Are you trimming in some places and adding in others?

We’re doing exactly what you’d expect us to do. We’re looking at everything in the company, and trying to ensure that we have our investments in the right place. It’s a team sport. We’ve done a lot of work across Oracle to be prudent in some areas with expenses. But at the same time, we’re investing. Our investment in Research and Development is up. As as you’ve seen, our investment in sales and technical people is up. We’re investing into the business because we think we’ve got a great hand and we want to go play it.

Are you investing in Europe, too? Everyone is concerned about their exposure there, given all the sovereign debt problems and the economic troubles there.

We invested during the year across all the geographies. We grew our U.S. sales organization. We grew our European sales organization. We grew in Latin America, and we grew in Asia. And we grew across most pillars of our business. We made material investments in our applications business, and our cloud applications business. We made investments in middleware — we think we have a very strong suite of middleware, and we want to increase our sales force there. We made investments in business intelligence. We think we have a strong offering with Exalytics, and we want to boost our efforts there. And we’ve made investments in engineered systems, and they’re showing up. If you look at the quarter, we booked almost as many systems in Q4 of 2012 as we did in all of 2011. So I think that’s a compliment to both the product and the capacity of the sales force.

Let’s talk about your engineered systems business, because I think that’s the newest piece that people are just beginning to understand. These are the Exadata, Exalogic and Exalytics systems you’ve been talking about. You’ve got the legacy Sun hardware business on one hand, but what’s fundamentally different about the engineered systems versus the traditional systems?

When you look at Sun, it’s a server line that has the SPARC chip and the Solaris operating system, and it has a very long history. So there’s a couple things we’ve done. Exadata is really a little different than a traditional Sun server. It’s a combination of five different technologies. It has a lot of DRAM memory in it. It has a lot of flash memory in it. It’s got incredible compression technology. We can take a database and shrink it and make it one-tenth the size that it was before. We network it with Infiniband, which gives us 10 times better performance inside it. When you shrink the database by a factor of 10, and run the data inside the computer 10 times faster, you’re doing what you did before 100 times faster. A report that used to take 100 minutes to generate now takes one. And, by the way, you can turn that into a cost benefit or a performance benefit. By that I mean, if you’re happy with 100 minutes, you need only one-tenth of the computer. Or you can run 100 reports in the time it used to take you to run one. It also really combines a server, storage and a database. It’s all of those things, and that’s why we call it an engineered system. And just as important as all of that is the fact that we put it together for you, we provision it for you. Our engineers take the Exadata and integrate everything, which normally you’d have your own people do.

And then you have specific flavors of these systems that are designed for specific industries, say retail or finance or health care?

Depending on how far up the stack goes. Think of Exadata up through the database layer. Exalogic goes up through the middleware layer. Exalytics takes the foundation of Oracle’s business intelligence suite. So they’re three different engineered systems that are built around different parts of the Oracle software stack.

So where does that leave the traditional Sun hardware business?

I think when you speak of Sun, you think of the T Series computer line and the M Series computer line. Larry [CEO Larry Ellison] has done a lot of investments in that core line. So in the traditional server line we’ve done new SPARC silicon, the T4, we’ve brought out a new version of the Solaris operating system, all in an effort to drive better performance and total cost of ownership. And we think now, as we push new releases of SPARC, we think we’re going to have the highest-performing silicon in the computer industry. No one argues that Solaris is the most advanced operating system of the Unixes that are available today. Now we’ve also done something new. We’ve introduced a SPARC Supercluster, and that’s all those different pieces in Exadata, built on a SPARC chip and running Solaris. So if you’re an older Sun-SPARC customer and want the benefit you get from Exadata, but you don’t want to switch over to Intel and Linux, which is what Exadata is built on, you can get them and keep SPARC and Solaris. We’re investing into the Sun base.

That brings me to another interesting point. Without diving too deep into the circumstances around the departure of Keith Block, he got caught in court documents saying some things about Sun products; and earlier, there were some statements made by Larry about letting the business around some older commodity products — Sun products, products where the profit margin is lower — shrink. Obviously you’re not going to defend what Block said, but at the same time, you’ve got Larry saying that it’s okay with him if the sales of certain hardware products fall to zero. Putting myself in the shoes of a longtime Sun customer, I wonder if you can unpack those two ends of a spectrum for me?

The best thing to do is tell you what we’re doing. We’re interested in selling intellectual property that differentiates Oracle in helping our customers run their IT better. That’s what we’re focused on. Those things manifest themselves in the T4 chip and Solaris 11 and SPARC Supercluster, and Exadata and Exalogic, and so on. A product that we bring to the customer that merely passes through our distribution channels and passes through our books, we don’t think we add a lot of value to that. We continue to do it mainly, though with less emphasis, because the customer has asked us to do it. Our view is that Oracle adds value where we can bring to bear differentiated intellectual property that gives people a better, more advanced solution that helps them do something cool and exciting.

Let’s talk about the cloud. Larry said Oracle is on track to be the No. 2 software-as-a-service (SaaS) provider after Salesforce.com, after all those acquisitions you’ve made. Oracle has always been kind of a traditional on-premise software player. How do you see the cloud strategy shaping up?

Let me first say this: You have to separate “cloud” from SaaS. First, there’s an incredible amount of Oracle technology running in the cloud: Oracle databases, Oracle middleware, Exadata, Exalogic. … So if you asked us to give us to give you cloud revenue, it would be huge. But that’s separate from SaaS. Just to be clear: We are No. 2 today in SaaS; we have roughly a billion dollars in SaaS revenue. And we’re just getting started. Our stuff is only just now hitting the market. We will have most of our Oracle portfolio running as SaaS on the Oracle cloud by the end of the calendar year. And when you look at our cloud, it’s best on our technology, running our apps. And by the way, that other SaaS company you mentioned — I can’t remember their name — their stuff is built on Oracle. And it was built three decades ago, in the ’90s. Our stuff is fresh, it’s new and modern and built on Fusion middleware.

Speaking of acquisitions, are you still in the hunt? You did Taleo and RightNow and Collective Intellect recently in the SaaS space. Are you still looking around?

We’ve said we’ve got a balanced capital allocation strategy. We’ve been big buyers of our stock. We’re increasing our dividend. And we’re continuing to look at deals that make sense. Larry has said that sometimes the best growth in Oracle’s history has been during economic downturns. And it’s because so many properties become available.

Did you kick tires on Quest Software?

I can’t comment on M&A matters.

When I talked to Meg Whitman at HP earlier this month, she talked about her desire to have a better relationship with Oracle, and how HP and Oracle crafted one of the “great partnerships in IT industry history.” It sounded a little like an olive branch to me. You’re unique in that you sat on both ends of that partnership at various times. Do you share her sentiment?

I can’t comment on that.

You’re coming up on two years at Oracle. Tell me a little about the division of labor. You work with Larry and CFO Safra Catz. How does it work?

It’s just like Larry said at D: All Things Digital. [See the full video here.] He does a lot on products, as he said. I run the revenue, and Safra runs most of our operations. And then, to be blunt, the three of us come together on the strategic issues, and we talk about the issues that cross the areas.

Today the Oracle narrative will pivot back to a San Jose, Calif., courtroom, where Oracle has been litigating its case against Hewlett-Packard. The highlight of the day will be an appearance on the witness stand by Oracle president and CFO Safra Catz.

Her testimony will be key for both sides in the trial, because it was Catz who negotiated with HP’s Ann Livermore, then head of its Enterprise business unit, over the terms of settlement of another lawsuit over Oracle’s hiring of former HP CEO Mark Hurd.

It was during these negotiations that a particular section of the agreement, the disputed $4 billion paragraph, emerged. HP contends that the paragraph requires Oracle to continue porting its software to HP’s Integrity servers, the ones that happen to use Intel’s exotic Itanium chip. Oracle says otherwise.

The Integrity line of servers lies at the very heart of HP’s Business Critical Server unit, and the uncertainty around its future, given all this legal mishegas, is causing HP some serious financial pain. Many — if not most — HP customers who buy Integrity servers run some Oracle software on them, and they’re the type of customers who don’t like to change their IT setups often, if at all.

HP says it has an enforceable contract with Oracle on the porting issue, while Oracle says not only that the paragraph doesn’t amount to a contract, but it also disputes that the paragraph in question was even included in the final signed settlement agreement.

For one thing: Once the legal trial with Oracle is concluded, one way or the other, she’d like to see HP and Oracle work together again, even though she conceded that the damage done to HP’s Business Critical Server business is hurting HP. She also said that HP will create a version of HP-UX, its version of Unix that will run on Intel’s mainstream server chip known as Xeon.

For another, she will not accept a job in a Mitt Romney White House in the event one might be offered. To do so would be to leave HP too soon at a moment when, more than anything, it needs consistent leadership.

Additionally, she doesn’t see a scenario where HP would spin off any piece of its operations, because in her mind they all fit together.

Below is a transcript of our conversation in its entirety. And while I realize it’s a long read, I thought it was important to let Whitman address every question I had for her completely. As you will see, we covered a lot of territory, because, well, there’s just so much territory to cover.

AllThingsD: Today’s message was long on what HP is about and less about specifics. There was the new marketing slogan “Make it Matter.” Hearkening back to your days running consumer branding for Procter and Gamble, can you walk me through what you think the new message means?

Whitman: When I came to HP, I was remarkably impressed with the assets that it has, and the people who are here. The crown jewel of the company is its people — it’s remarkable — and what they have lived through would have created far more disruption at other companies. As I began to understand HP, I said that it hasn’t been very good at telling its own story. Every CIO I talked to today — and I have a room full of 160 CIOs over there — when they walked through the showroom floor after today’s keynote, said they had no idea as to the breadth and depth of everything that HP does. And these are our best customers and they did not know. So I thought we needed to tell our story better. And when you start a marketing campaign, you always start with the authentic truth about the company because you have to be able to say something that no one else can say and that’s authentic about the company. So we got the 50 marketing executives in a room and started to think through what is unique and different about the company and we came very quickly to “Make it Matter.” Because in fact what we do makes it matter. It matters to the International Space Station or the Department of Works and Pensions or the U.S. Navy or Alianz or Deutsche Bank or Facebook. It matters what we do. Our people take great pride in that. And it’s also true that HP will do anything for its customers. If you get into trouble, we will darken the skies. That seemed to be the authentic thing that we could say.

And how will we be seeing this message in HP marketing?

All the business units will tuck under that messaging. So you will see it around PCs and printers, and in servers and storage and networking, in the storage business. Sometimes it will be digital, sometimes it will be print, sometimes in social media, sometimes on TV. Corporate wide, everyone will tuck under that message.

Does the HP brand need major rehabilitation and repair or more of a polishing?

I think we need to tell people what we do, so I think that’s more of a polishing, to tell people what we do. In my view we just need to tell people who we are, what we do and the value that we bring. And I think the other thing about HP is that this is not about the network or the database. It’s about our customer. This is something that I bring to HP, because I’m not an enterprise salesperson. At eBay I was a customer, and so, I think we can be completely differentiated by saying it’s not our agenda, but your agenda. And I think that’s very authentic to HP.

Let’s talk about the restructuring process that you announced during the last earnings call. You said on CNBC the next day that you thought the restructuring process was by that point about 10 to 15 percent complete. You announced that you’re going to cut about 27,000 jobs, so then I wonder what you think is the next big step in that process? What’s the next big hurdle that gets you to, say, 20 or 25 percent complete?

I would say this is a journey of decisions that need to be made and of strategies that need to be laid out. If you go back to when I took over, I made the decision about the PC business, I made the decision about WebOS. I recognized that we needed a strategic realignment to remove complexity from the business, so I combined PCs and printing under Todd Bradley, moved the Global Accounts sales force to Dave Donatelli, combined our sales organizations — we had two huge sales organizations under John Hinshaw — and then unified marketing and communications, all with the objective of making it easier to sell, easier to buy from us, and easier to get work done at HP. Then we all recognized that we needed to have the financial capacity to invest in the business. The way we were headed it was not going to happen, it was unsustainable. And we have a cost structure that we can no longer afford, so we took the very tough step of addressing how we can do things more effectively. And it’s never easy to reduce the workforce by 27,000 because it disrupts peoples lives. But in my view we couldn’t afford to wait to make the needed investments to set HP up for the next five years.

Is cutting 8 percent enough? Some thought the cut wasn’t large enough.

I think it’s about the right size. You never know for sure, but we’re taking the very best analysis that we can. I will say something about HP: When this company set its mind to something it brings to bear deep analytics, and so when you know what you’re doing you know why because they just get after it in a very deep analytical way. When we weighed the PC spinoff, we spent 30 days on it, and it was like, ‘alrighty, then.’ And this was the same in many ways. Once we knew, we decided to go forward thoughtfully. So we’re also tacking cost structures around supply chain and SKU reduction, and simplifying the overall organizations. So I think you’ll see us execute against this for awhile. We’ve got to deliver the savings, we’ve got to restructure some of our business processes and we’ve got to make it easier to do business with us. So now we’ve got a strategy, we’ve got the mechanism. Now we’ve got to execute.

Execution is a word I often hear described as a specialty of yours. What do you do to get people to execute?

I think you get results from what you measure, so what I measure is really important. At a company this big you have to have a cadence around that measurement and around the dialogue with your business units. It starts with my executive team. And I think I have the right people on the right jobs at the right time. And now it’s a matter of holding ourselves accountable. And that doesn’t mean there won’t be challenges and problems, but once you’ve identified the problems and a way to fix them you have to measure the progress. This was something I learned very early and was a hallmark of how I ran eBay and how I think I did well at P&G and Disney. But at the same time, you have to identify the pockets of creativity and where to invest, and that’s just as important as how you capture value. Once you save all that money the question is what do you do with it? We better make sure we put it in initiatives that have a high return on invested capital. You can’t do everything, and you can’t give everyone a little. You have to give a small number of people a lot.

So, about the investments you’re going to make. You talk often about a renewed focus on services. This question comes from a former HP employee. You said today in your keynote remarks that about 70 percent of HP’s sales come from infrastructure or what I would call hardware. And yet you talk often about services. Given those two choices, which do you think is more likely to save HP? Selling more boxes and things or selling more services?

Let me reframe it for you. It’s about optimizing our existing set of businesses to perform as best as they possibly can. They’re not. Revenues are down 7 percent and earnings are down 21 percent year on year so we have to get our core businesses, all of them, optimized and functioning really well. And then we have to position ourselves to take advantage of the bigger changes in the technology industry. I’m a big believer in focus. So as we thought about the pan-HP initiatives we might have picked, we went with cloud, security and information optimization. There were others we might have picked. But I thought about what we do well, what we already have, and what we can deploy against some of these bigger shifts in the industry.

So on focus — I’m wondering about the similarities and differences of what IBM went through. It spun off several things like PCs and printing and hard drives. And yes, the circumstances are very different and yet there’s some thematic similarities. When the PSG spinoff idea was floated, it was immediately compared to IBM. Do you envision getting rid of any peice of HP or do you plan to keep the whole thing? Are there some peices that are not core?

No. As I see it, everything stays. Each of the pieces fit together. They are very big and significant businesses in their own right. The PC business is at $40 billion and number one in the world. Not long on operating margins but because of the way its engineered, it has almost an infinite return on invested capital. You gotta love that business.

Let’s talk about two messy pieces of business, if you don’t mind. First is Autonomy. It’s the one thing that’s still lingering from all the announcements of last Aug. 18. The former CEO Mike Lynch is leaving HP. You’ve said that company delivered some disappointing results. What happened there and what does success at Autonomy look like in your mind?

In my view, this is the classic case of scaling a business from start-up to grownup. Going through that barrier of a billion dollars in sales is not easy because you can’t run the organization at $1.5 billion the same way you did at $500 million. You just can’t. And for many entrepreneurs, processes and discipline are dirty words, and you have to have those things, especially within the context of HP. I know exactly how this world [works]. My view was that we needed to make a change to someone who can take Autonomy to the next level. I have every confidence that Autonomy will be a very big and very profitable business. It’s taking advantage of a big shift in the industry toward big data and unstructured data. But we needed different leadership to age Autonomy, and by that I mean age it kind of like wine.

And so you added Autonomy to Bill Veghte’s responsibilities.

Yes, it’s going to be Bill for now and ultimately it may end up back in the software business, but I need full-scale attention on this by someone who has a lot of experience. We’ll figure out later if its permanent or not, but right now he’s the guy.

What does success look like at Autonomy?

I think it needs to grow rapidly. I think this is a very rapidly growing market. We need to continue to lead it. The good news is that I don’t see a competitve disruptor in the marketplace. So I think we have a good opportunity. But I also want to make sure that it gets integrated into the rest of HP in a good way. So we’ve started adding Autonomy into document workflow in our printers. And I want to think through all the different ways that Autonomy can be useful to the rest of HP, and we’re just starting to think about that.

The problem I think you said was that there was some difficulty closing deals at Autonomy that HP had teed up?

It’s classic. HP fed Autonomy a huge number of deals. But Autonomy didn’t have a system for accepting those deals, and closing them. And understand, when you’re working with big companies, there’s processes. When you sell with Enterprise services, there are steps you need to go through. When you sell with Dave Donatelli, there are some steps you need to go through. So that was the biggest challenge.

Asa Mathat / AllThingsD.com

That was nice of Larry. There’s no question that the BCS business has been hurt by this. You can see it in the results. It was growing by 10 percent before Oracle refused to port and now its declining by between 20 and 30 percent a year. This has been very tough for HP and very tough for Dave Donatelli’s business. In the end, if we win the lawsuit we will continue to protect our customers interests. The reason we went to the mat with Oracle on this was because we have a lot of customers on Oracle Itanium who do not want to switch, do not want to get off of HP Unix and on to something else. And they kinda like what they have and they’d like to stick with it. I think either way, Dave’s got in the works the next generation of Business Critical Servers on a more open platform. It’s called Odyssey, which is pretty cool. Ultimately we’ve got to build Unix on a Xeon chip, and so we will do that. I don’t have a lot of animus toward Oracle, and historically ours has been one of the great partnerships in IT history. I have a lot of respect for Oracle and when we’re through this court trial I would like to see us work together again.

Has anyone sought to call Ellison or Safra Catz and try to sort it out?

There has been a lot of back and forth, some of it before I came on board. It’s a very rapidly changing industry. I’d like to believe that once we get this behind us we can work together again.

You don’t think the damage to BCS is permanent?

It’s not been a good thing for the business. Let’s be very clear about that. This has not been good for HP. In the end it’s all about our customers, and it’s not been good for them.

Let’s talk again about SKU reduction, which is a favorite subject of mine. How might it become apparent to customers? What does it mean to you?

Reducing complexity, improving quality, reducing inventory, and better meeting customer needs. Somehow this company got into the habit of adding more and more options for more and more people, which on the surface is good, but when you examine the law of unintended consequences it’s not good for the company and it’s not good for the customers. The more platforms you develop to, the more SKUs you have, the more complicated it is, and there’s a higher chance of quality problems slipping in. And so everyone in the company is in agreement with this part of the strategy. I think you will see a smaller number of products tailored to specific market segments where we can get real supply chain leverage, real inventory leverage and real parts leverage. You forget about all the spare parts we have to carry on the inventory. I think this is a big part about how we deliver better quality at lower cost and deliver real benefits to customers.

You’ve been on the job eight months. No one really brings up the question of succession, you have deep management bench, but — knock on wood — if you get hit by a bus tomorrow, who’s in charge?

The board takes this sort of thing very seriously. We have a succession plan in place for all my senior execs, including me. I’m not going to give you any details about it, but that was a good try.

Mitt Romney has said that he thinks you should have been elected Governor of California, and so the fact that he’s talking about you makes me wonder, if he wins in November, if you might find yourself offered a job in a Romney White House.

He might call me, but categorically I would not accept. This is a decision I had to make before accepting the job to run HP. You can’t land at a company like HP, that has gone through what it has gone through, and think that you’re only going to stay 18 months.

Even if he offered you a spot on the as his vice-presidential running mate? Not that anyone is talking about that.

Categorically no. HP needs consistent leadership more than anything else. And my view I will stay as long as the board would like me to stay. It would be completely the wrong thing to do to leave HP right now. And by the way? I love it.

So what happened? A few things, as Oracle execs tried to explain on a conference call.

• The currency effect: As President and CFO Safra Catz explained, what had been a 1 percent tailwind for currency effects turned into a 2 percent headwind. With all the violent swings in the value of currencies around the world as compared to the U.S. dollar, Oracle suffered a negative effect that pinched revenue.

• Deals didn’t close during the quarter: Catz said that in the final days and weeks of the quarter, some customers added an extra layer of executive approval to close deals to buy Oracle stuff. That meant that some deals Oracle had expected to close before the quarter’s end moved into the next quarter. Catz said that Oracle has taken steps to better manage deal flow to take this into account. It is consistent, however, with recent statements from other enterprise IT vendors, like IBM and NetApp.
• Transitions: Oracle’s SPARC server business just switched to a new chip called the T4, which was unveiled late in the quarter. The machines require a total upgrade, and that means a lot of testing with existing applications, which can slow down deals for the new machines, while at the same time sapping demand for the prior generation of products. That had a lot to do with hardware sales dropping by 14 percent year over year to $953 million. As Catz put it: “We saw good early demand for the new SPARC SuperCluster, but only released the product for general availability at the very end of the quarter, allowing us to ship only a couple.”

Catz also predicted that hardware sales will decline as much as 14 percent this quarter, although CEO Larry Ellison was bullish on its growth prospects later this year. New software license revenue, a key metric gauging software sales, is expected to grow in a range of 2 percent to 12 percent. Total sales are expected to grow in the range of 3 percent to 7 percent, and per-share earnings are expected to come in between 56 and 59 cents, which is in line with the consensus of analysts.

There were a few things that went right. Ellison did what he usually does on a conference call, and crowed about examples where Oracle is beating a competitor. This time, the targets were IBM, Cisco Systems and SAP, but not his usual punching bag, Hewlett-Packard. Oracle won several competitive deals from Big Blue and Cisco, as well, with customers as varied as Australia’s University of Melbourne, the U.S. Food and Drug Administration and the Hyundai Kia Motor Company.

Ellison also hinted that Apple is a big Oracle customer. He mentioned a “a very large American smartphone manufacturer” that had bought more than 30 Oracle Exadata systems as it built out its cloud. Unless I’m missing something, there’s really only one company that fits that description, and that’s Apple. Its use of Oracle gear within the mix at its North Carolina data centers has been speculated about before, but never confirmed by Apple directly. (Big surprise, that.)

Given the recent feuds between the management teams at the two companies, Oracle’s acquisitive history and HP’s sudden weakness, it doesn’t take much for a popular narrative of Oracle buying HP to emerge. It would be a dramatic denouement to the events of the last year that have found HP and Oracle at increasingly caustic loggerheads. Oracle CEO Larry Ellison would take some kind of victory lap and mount HP on the wall like a of trophy.

The idea gained some currency with an Aug. 21 story in the New York Post (which, like this Web site, is owned by News Corp.) arguing that HP’s $11.7 billion bid for the British software firm Autonomy, having caused shareholders to knock $12 billion and change off HP’s market cap, would therefore make HP more attractive to Oracle.

The meme gained further currency with a Bloomberg News story saying that HP’s board was “concerned” that its weakened condition had left it vulnerable to Oracle.

Let me put it like this: No. Just, no.

The first problem with the notion is this: What parts of HP would Oracle want to own? Answer: Practically none.

First, let’s look at the condition of Oracle: Its mainline software businesses are showing healthy returns, while its hardware business, built on the foundation of Sun Microsystems, the IT hardware concern it acquired last year for $7 billion, is ramping up to full speed. But here’s a fundamental truth: Software carries a higher profit margin than hardware, so when software companies buy hardware companies, they can’t avoid seeing their overall profitability erode.

Consider Oracle’s operating margin during its fiscal fourth quarter — its seasonally strongest quarter — during the last three years. In 2009, before the Sun deal was closed, it was 43.4 percent. In 2010, after the Sun deal was closed, it was 38.3 percent. In 2011 it was 41.6 percent. And during Oracle’s most recent conference call, CFO Safra Catz said Oracle hopes to get back to “pre-Sun” operating margins soon.

Now let’s look at HP and its operating margins: In its most recent quarter ended July, HP’s enterprise, storage and networking business turned in operating margins of 13 percent, which were down from 14 percent in the prior year’s period. The story was the same in practically every other HP business unit: Operating margins in services fell from 15.7 percent to 13 percent; in software they fell from 28 percent to 19.7 percent; imaging and printing margins fell to 14.6 percent from 16.9 percent. The only place they increased was the personal systems group — the PC unit that’s being considered for a spinoff — where they grew year on year from 4.7 percent to 5.9 percent.

Conclusion: Owning HP would do nothing good for Oracle’s profitability, especially at a moment when the stated goal is to nudge them up.

There’s more. As Mark L. Moerdler, an analyst at Bernstein Research, argued in a research note to clients on Sept. 26, software accounts for about 2 percent of revenue at HP. And what software it has is not the type that Oracle typically likes. When Oracle does acquisitions, it grabs companies that make applications that plug holes in its own product portfolio. The majority of HP’s software offerings — Autonomy nothwithstanding — deal with infrastructure management, not exactly a priority for Oracle. It is, however, a business where IBM and Computer Associates participate.

And there are two historically important business units at HP that would be outliers at Oracle: PCs and printers. Oracle has no interest in either one, and it’s hard to see that changing. Combined they make up more than half of HP’s annual revenue. In the hands of Oracle, they would probably end up being spun out, either together or separately, but why buy a whole company only to chop off more than half of it — a half that’s shrinking at that — at what would have to be unfavorable terms.

Let’s not forget the valuation estimate of HP’s $40 billion PC business: Analysts have expected that a hypothetical buyer might pay as little as $8 billion for it, or about one-fifth trailing revenue. Why go to all that trouble?

Further: Why would Oracle buy a company that’s roughly one-quarter exposed to the consumer market. Sure, HP has a retail distribution network that’s the envy of the PC industry. But Oracle would rather sell those retailers systems to help them manage their businesses, not the PCs they in turn resell at razor-thin margins.

If that’s not enough, then there’s one key bit about HP that Oracle would actively dislike. HP, by virtue of being the biggest distributor of Windows-based PCs and servers, is the world’s largest reseller of Microsoft Windows. If there’s anything more utterly antithetical to Oracle’s core values than helping put money in Microsoft’s pocket, I haven’t heard of it.

Finally, there’s the issue of cash. Even in its weakened state, HP is trading at a market cap of $45 billion and change. Assuming a premium for the whole thing, that pushes a hypothetical price tag to $60 billion. That’s too rich, even for Oracle, whose balance sheet as of Aug. 31 contained a combined $31.6 billion in cash and marketable securities. It would have to take on a tremendous amount of debt — amounting to 82 percent of fiscal 2011 sales — to get such a deal started, let alone closed.

HP’s directors and shareholders can rest easy. They have many worries about the Silicon Valley icon and the troubles in which it finds itself. But being acquired by Oracle isn’t one of them.

Today, Fortune magazine released its annual “50 Most Powerful Women in Business” and, as usual, it had its share of tech execs on the list.

And off it, too — first and foremost being ousted Yahoo CEO Carol Bartz, who was jacked completely from her 2010 No. 10 rank. She was No. 8 in 2009.

In her place: Newly designated Hewlett-Packard CEO and former eBay CEO Meg Whitman grabbed the No. 9 spot.

Also on the list: fast-rising IBM sales, marketing and strategy exec Ginni Rometty at No. 7; Xerox CEO Ursula Burns at No. 8; Oracle President and CFO Safra Catz at No. 11; Facebook COO Sheryl Sandberg at No. 12; Google execs Susan Wojcicki and Marissa Mayer at No. 28 and No. 38, respectively; IBM North America GM Bridget Van Kralingen at No. 39; and Best Buy Americas President Shari Ballard.

Catz was the highest paid of the group, with $42.1 million in total 2010 compensation.

And also taken off this year: 2010 No. 14, HP’s Ann Livermore, who left her top job there, but still is on the tech giant’s board; 2010 No. 28 Cathie Lesjak, CFO of HP; 2010 No. 44 Lorrie Norrington, a former president at eBay; and Apple’s communications head Katie Cotton (she was robbed!), who was No. 50 in 2010.

The new list will be in the magazine on Monday, which is when a related conference will take place in Southern California. (I will also be in attendance there, along with other less powerful ladies.)

Whitman is scheduled to speak at the conference in the afternoon on Tuesday, October 4.

Rumors that Oracle is considering another acquisition appear with unsurprising regularity given the pace of its deal-making over the last several years. One such rumor I noticed late last year was around Autonomy. Others companies mentioned in Oracle-takeover rumors that haven’t materialized are Ultimate Software, Lawson and Blackboard. The reason?

Over the years, Oracle has often grown by acquisitions, but that works only when the valuations of target companies are attractive. Right now they’re too high, Ellison says. President and CFO Safra Catz put it much more simply at the end of the audio clip below: Valuations are, right now, “quite ridiculous.” Meanwhile, as today’s earnings results show, Oracle is growing just fine organically without making any big deals for now, he says.

Still, that didn’t stop Oracle from acquiring privately held Web software player Fatwire just yesterday.

You can hear Ellison and Catz discuss it in the audio highlight below. The clip opens with the final question from today’s earnings conference call, from Wells Fargo analyst Jason Maynard.

Oracle CEO Larry Ellison Says He’s Done Shopping For Deals, For Now by ahess247

The weakness in hardware sent shares down by more than 4 percent in after-hours trading. Oracle said that in the wake of its acquisition of Sun Microsystems a year ago, the company is focusing more on selling a lower volume of hardware at a higher profit margin. That process of transition is still underway as you can read in my liveblog coverage from the earnings conference call below.

2:12 pm: And the call is underway. President Safra Catz is making some opening remarks.

There’s the first reference to hardware. “We’re running the Sun business in a more profit-aware manner than before.” Hardware gross margins were 56 percent. Later this year I expect the growth in the Sun products to be “quite obvious.”

“We could be back at pre-Sun operating margins quite quickly as there remains a lot of leverage in our operating model.”

Catz: “We now have $29 billion in cash and marketable securities.”

Guidance: As you remember, we had a spectacular Q1 last year. Assuming exchange remains at current levels: New software is expected to show 10 to 20 percent growth, hardware is plus or minus 5 percent.

Total revenue expected to grown 9 to 12 percent non-GAAP.

EPS 45 to 48 non-GAAP.

2:17 pm: And here’s Larry. “We’re already nearly twice as big as IBM, and taking share away from them in databases.”

We did a number of cloud computing deals. We did a deal with Salesforce.com this year. We did a deal with the biggest and best names in mobile devices and cloud computing. (Could he be referring to Apple?)

The expansion of our Exadata business plus our Exalogic business, should turbocharge our hardware business.

And here’s Mark Hurd. We sold a lot of software. Software growth was broad based. It was the first time we’ve ever sold more than $1 billion in apps.

Our sequential growth in Exadata was more than 50 percent. Proctor & Gamble, J.P. Morgan Chase and Apple (yes, Ellison was talking about Apple earlier) have helped us cross the 1,000-system threshold. (Paraphrasing Hurd there.)

2:21 pm: Time for Q&A from the analysts.

First question from Morgan Stanley: The hardware business: How material was the headwind relative to the shift in the model? What gives you confidence that you can get it growing again? And a question about attach rates.

Hurd answers: He is explaining attach rates. We’ve moved to a model where we have the service lined up to the sales activity. Selling units that have no gross margin is easy to do. We are focused on selling hardware systems at a higher price, that are of a higher value to the customer and that stay installed longer.

Question from Merrill Lynch: A question about guidance. How you might have incorporated a questionable macroeconomic forecast. And a second question about attach rates.

Larry jumps in: The attach rate to Exalogic and Exadata is 100 percent. They are becoming a bigger part of our overall hardware business. That improves our profitability. Exadata is growing faster than our traditional Sun line. We sell more and more engineered systems and fewer undifferentiated systems. This allows us to increase our sales of Middleware because it runs better on Exalogic.

Ellison: We sell more database and middleware because of Exadata and Exalogic.

Catz on the economy: We’ve got guys around the world who roll in a forecast for us. But its very much the same. The truth is the economy is as it is, and we continue to grow. This was an organic growth quarter for us. We’ve got a lot of very Oracle-specific momentum going.

Hurd: We added 800 people to the sales organization this quarter. If that gives you an idea of our confidence of where the market is.

Question from Credit Suisse: Question about the sales force change that the analyst focused on in his pre-earnings note last month.

Hurd on the sales force: We put more territories in the field by getting more density of coverage. We believe we are under-distributed. When we get in front of more customers we sell more software.

Hurd: One salesperson had 20 customers. We think that person can sell just as much software calling on five customers.

Ellison: We’re going to add a couple of appliances. One is a large memory addition to Exadata for Big Data. As memory becomes cheaper and larger scale. We’ll be announcing in the fall at Oracle Openworld.

He’s now answering a question about Hadoop boxes. He says they don’t replace databases. The Big Data accelerator includes some of the open source components like Hadoop and some other Oracle pieces that can speed up the MapReduce process that Hadoop does. Oracle has always followed database technology trends…and kept up and quite often led on innovation.

Ellison: IBM still hasn’t come out with an appliance that runs their DB2 database very fast. Instead they ran out and did an acquisition. (Seems IBM is the going to be the victim of his verbal jabs this call, not Hewlett-Packard.)

Question from J.P. Morgan: Hardware margins were strong. The higher margin business was better than the low margin. But this is the second quarter in a row that hardware has decrased. Is it because the commodity business is shrinking faster?

Hurd: Its just the fundamentals of building a business. We are putting more coverage out in the market. Making sure we attach all the peripherals. We want to grow the top line, but we want to grow it right. Getting these high margin sales is key. You’re going to see material growth in Exadata and Exalogic. We’ll be focused on some competitors that have some key vulnerabilities.

Catz: We used to resell Hitachi, but the other big storage we sold was LSI, which during the quarter was sold to NetApp. Our selling of those storage products overall is down, but selling our own storage products is up.

Hurd: You see the same thing in the server business. The higher margin products have higher growth rates, and the x86 line is slower.

Catz: We see deals come in that aren’t profitable and so we walk away from them. We want to make money. We’re funny that way.

Question from UBS: About the forecast for new license revenue.

Catz: We always have some spillover. We look at what the guys are forecasting. The Exadata and Exlogic systems really help because you have to buy software. On the app side, we’ve been on a roll. I add my own little bit of conservatism. The summer means chasing the contracts while people are on vacation.

Question for Elllison: You thought there would be 50 to 100 customers for Oracle Fusion.

Ellison: We have a number of Fusion customers that are live, and it’s being rolled out completely. We’re the only application vendor that offers the same technology on our cloud, or you can put it on your private cloud. And if you want we’ll run it for you.

Ellison: We think we’ve been competing very well with SAP, very effectively. They have no answers regarding the cloud at all. They have nothing. (Okay, now SAP gets a little bit of Larry’s abuse.)

Question from Lazard Capital: A question about Exalogic. What’s driving the growth and are there any significant customer wins?

Hurd: With Exalogic you go to Java applications and want to speed them up versus when you’re running them on x86. It’s an extremely attractive value proposition.

Question from Wells Fargo: You have a lot of cash on the balance sheet. How are you thinking about acquisitions? Valuations aren’t exactly low. (Oracle has $29 billion.)

Ellison: We had 19 percent growth without acquisitions. We can grow through acquisitions when they are attractive and make sense. Right now they aren’t and so we aren’t doing them. Right now we’re focusing on organic growth, which means increasing the sales force and introducing new products. We think we have a lot to sell. We can grow by acquistions when the opportunity presents itself and when the economics make sense. Right now they don’t make sense.

Catz: Every once in awhile we find a jewel. Price does matter to us. We just want to make sure it’s a good business case when we do it. Prices have recently been quite ridiculous.

And now a follow-up question on Catz’s earlier comment on returning to pre-Sun operating margins.

Catz: We ingested a money-losing hardware company and we still have the highest operating margins in the software industry. There is no reason why this year couldn’t be really spectacular.

With the software business and the enormous installed base who renew with us every year, there’s still a lot of room left in our model.

And that’s a wrap!

The company just reported earnings for its fourth fiscal quarter. Sales were $10.78 billion, slightly ahead of the $10.75 billion that had been the consensus of Wall Street analysts, and up 13 percent. Per-share profits were 75 cents, up 36 percent, and beating the consensus of 71 cents.

Revenue from new software licenses was up 19 percent to $3.7 billion. Software license updates and product support revenue was up 15 percent to $4 billion. Hardware sales were down 6 percent to $1.2 billion.

The weakness in hardware sales appeared to cause a sell-off of Oracle shares in after-hours trading. As of 4:26 New York time, shares were trading at $30.49, down more than $2, or more than 6 percent.

CEO Larry Ellison described the database software business as having its “fastest growth in a decade,” and that Oracle has been adding features to the software to exploit opportunities in cloud computing and big data.

Sales of Exadata machines — the ones that combine computers from the old Sun business with Oracle software — “made a strong contribution” in the quarter, president Mark Hurd said in a statement. He said that Oracle has sold 1,000 of the machines worldwide, and that the goal is to triple that number in the next fiscal year.

In a statement, CFO Safra Catz said that software license revenue grew 19 percent “with almost no help from acquisitions.” That helped push operating margins to 48 percent on a non-GAAP basis.

For the fiscal year, Oracle finished the year with $35.6 billion in sales and a per-share profit of $2.22 non-GAAP.

Oracle’s statement yesterday called the appointment of Safra Catz as president and CFO “permanent.” While that’s clearly meant to convey that this is no interim appointment, which was the case in her first turn as CFO during a three-year period that ended in 2008, does it also imply that Catz has reached her peak on the management ladder?

At least one analyst has concluded that it does. Pat Walravens, an analyst at JMP Securities tells Bloomberg that Catz’s appointment sets the pieces in place for President Mark Hurd, the 54-year old former Hewlett-Packard CEO, to take the reins from CEO Larry Ellison at some point in the future. Hurd, he says, gains more day-to-day control over the company, giving him a logical springboard to the corner office.

But is it really so clear? Before Hurd arrived on the scene, it was Catz who had always been described as Ellison’s heir apparent. She won her stripes primarily overseeing Oracle’s $10.6 billion takeover of Peoplesoft in 2005. At an Oracle event in 2005, Ellison said “If I dropped dead tomorrow, Safra Catz would be CEO of Oracle.” That implies that a formal succession plan saying exactly that was once–and may still be–in place. And by getting a title that begins with C, something Hurd doesn’t have, there’s a further implication of seniority that effectively makes Catz appear to be the second most powerful person at Oracle after Ellison.

Obviously there will be more tea-leaf reading to come from all this. And there will be more signals from Oracle that will be interpreted and re-interpreted again. Ellison is 66 years old and has been running Oracle since the days of the Carter Administration. He’s showing no signs of letting go of the pilot wheel just yet. (You just know he’s going to live to be 180.) Hurd is 54 and Catz is 49. Ellison likes them both. Time will eventually tell who gets the nod.

“Safra already has the long-standing confidence of our employees, our board and our shareholders,” said Oracle CEO Larry Ellison in a company statement. “There is no more logical choice for CFO.” She joined Oracle in April of 1999, started serving as director in 2001 and became a president in early 2004 (and was joined in that position last year by former HP CEO Mark Hurd). She’s also a director at HSBC Group.

Oracle offered no elaboration on Epstein’s departure.

Catz’s most recent public duties included running Oracle’s quarterly earnings conference call last month, while Ellison served on jury duty.

Catz herself appeared in court not once but twice during Oracle’s intellectual property trial against SAP, and annoyed SAP lawyers with the “colorful analogies” she cooked up that were intended to make the point that Oracle deserved the $1.3 billion a jury had awarded it, not the $40 million SAP said it owed Oracle.

The company also raised its quarterly dividend by a penny per share, or 20 percent, making this the third year in a row it has boosted its dividend. It said it doesn’t expect significant impact on its operations in Japan following the earthquake. There had been some concerns.

Oracle said it expects profit–excluding one-time expenses–will be in the 69- to 73-cent range this quarter, beating the 66-cent average estimate of analysts. Revenue is expected to grow year-on-year in the range of 9 to 13 percent, which works out to a range of between $10.4 billion and $10.7 billion.

The results were led by sales of new software licenses, a key measure of new business as opposed to sales to existing computers, which rose 29 percent to $2.2 billion. This handily beat the company’s guidance for growth in new licenses of 10 to 20 percent.

Software license updates rose 13 percent to $3.7 billion. Hardware sales were $1 billion, but since Oracle closed on its Sun acquisition during this quarter a year ago, a year-on-year comparison doesn’t apply.

The strong earnings report comes a day after Oracle launched a quarrel with hardware rival Hewlett-Packard and chipmaker Intel by saying it would no longer develop software that runs on systems using Intel’s Itanium Processor because it expects Intel is quietly planning to kill the chip. Intel denied the claim, saying two new versions of Itanium are in the pipeline, while HP, which sells most of the systems containing the chip, said it was “shocked.” Oracle stuck to its guns, saying it was only trying to help its customers plan accordingly.

Speaking of HP, with Oracle CEO Larry Ellison serving on jury duty, it fell to President Safra Catz to deliver this quarter’s obligatory dig at HP during a conference call with analysts.

With Oracle’s hardware business showing a healthy hardware margin–which is interesting in light of the fact that the results contain the hardware assets of Sun Microsystems–Catz reiterated a prior promise to deliver a $1.5 billion profit on the Sun business by the end of this fiscal year. That makes Sun a good purchase, she said, when compared to HP’s acquisition of 3Par, though time will tell if Oracle can deliver on the promised $2 billion profit in year two.

It’s probably not a fair comparison. Sun was trading at an extremely depressed valuation when Oracle stepped in. Only months before, Sun had been trading at the value of its cash holdings. 3Par, on the other hand, saw its valuation triple as the result of a punishing bidding war between HP and Dell. However Catz isn’t the first one to say HP paid too much. But as usual, any chance to tweak HP’s nose is fair game at Oracle, as you can hear in the audio clip below.

Safracatz1 by ahess247

But he sounded particularly determined when articulating his vision for Oracle’s plans in the high-end server business, which is based primarily on the hardware business Oracle got as part of the Sun Microsystems acquisition.

Naturally, Ellison’s plans are nothing less than total domination in the world of high-end servers. Below is an audio clip, about three minutes in length, in which he articulates his vision.

In fairness to HP, which as usual bears the brunt of Ellison’s trash-talking, it has dismissed the benchmark about which Ellison is so proud of beating HP as outdated. Time will tell if that ultimately matters.

The clip begins with Oracle President Safra Catz congratulating Ellison on winning so many sailing races before giving him the floor.

Larry Ellison speech by ahess247

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.

“[Their offer] doesn’t value our intellectual property at all,” she said, adding that TomorrowNow’s infringement encompassed more than just support documentation. “Yes, there were documents and help guides and things like that, but there was also the software itself–probably millions of lines of code, which is what the products really are….And we spend billions a year on R&D. This is a business where intellectual property is worth billions.”

Greg Lanier, a Jones Day attorney representing SAP, pressed her on that point insisting that Oracle isn’t owed such a large damages award because the value that the company lost to TomorrowKnow’s infringement is that “Oracle doesn’t get the chance to sell that software to someone else.”

But Catz wasn’t having any of it.

“You know, if Warner Brothers had a little subsidiary that copied Disney’s entire library and started selling it for $2 a copy, and they got caught and then offered to give Disney back half of what they made, is Disney’s library only worth $50?” she asked. “I mean, really. It’s valuable. The fact that it was copied doesn’t change that it’s valuable.”

Lanier quickly dismissed Catz’s point as a “colorful analogy,” reminding her that there are only 358 lost customers at issue in this case. Hard to imagine that such a “colorful analogy” in an otherwise tedious enterprise software case didn’t resonate with the jury, though.

Closing arguments in the case begin on Monday, with jury deliberations to follow.

PREVIOUSLY:

• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Indeed, speaking to reporters in the courtroom hallway this morning, Boies said that the evidence Oracle presented during the trial proved that Apotheker had knowledge of the copyright infringement scheme at issue in the case. “The testimony and evidence prove that Mr. Apotheker oversaw the copyright infringement scheme,” Boies said. “We did not show the 2 year old video deposition because it was taken before SAP stipulated to liability.”

Of course if Apotheker was as pivotal a figure as Boies maintains, one would think that there would at least be some content in his video deposition worth showing the jury. Certainly, that’s the view of SAP, which continues to maintain that Oracle’s repeated shots at Apotheker are more about the PR trial being conducted outside the courtroom than anything else.

“Today’s proceedings focused on the damages, and we remain confident that we have demonstrated a clear case for fair compensation to Oracle for the limited operations of TomorrowNow,” an SAP spokesperson said in a statement. “We trust now in the jury to bring this matter to an appropriate conclusion.”

HP has not yet commented on Boies’s remarks. The company reports earnings next week, and Oracle would obviously not be unhappy if any of this legal unpleasantness happened to lodge in investors’ minds.

UPDATE: Here’s HP’s official comment: “Oracle’s current stance is clear proof that they have been trying to harass Léo and interfere with his work at HP. As HP has said repeatedly, Oracle had ample opportunity to question Léo in the two years after he gave a full-day deposition. Léo was never asked to give an additional deposition. As HP and SAP have noted, Oracle chose not to include Leo as a live trial witness until after he was named CEO of HP. Léo had a limited role in the matter.”

PREVIOUSLY:

• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Then it’s on to closing arguments, now scheduled for Monday, and finally deliberation. Odd to think that the case has reached this point with so few SAP board members actually testifying live in court. Looking over the final witness list for the trial reveals a number of noteworthy no-shows (beyond Hewlett-Packard CEO Léo Apotheker): Former SAP CEO Henning Kagermann, COO and board member Gerhard Oswald, co-founder and board chairman Hasso Plattner, and, most interestingly, CFO Mark White, SAP’s designated corporate representative for the trial and the guy tapped by its board to clean up the TomorrowNow mess.

Why didn’t SAP put them on the stand? Perhaps it’s because Werner Brandt and SAP co-Chief Executive Officer Bill McDermott, the only board members to take the stand, fared so poorly there.

Or perhaps it’s simply because of the way the trial has played out. “We’ve said from the start that our focus is on damages, that we are interested in resolution of this dispute and determining a reasonable number for damages, and putting the matter behind us,” an SAP spokesperson told me. “The witnesses we call support that focus. Please keep in mind that there were 73 names on the witness list when it was submitted. Since that list was submitted, the scope of the trial has been narrowed considerably and the length of the trial has been shortened.”

UPDATE: I’m told Kagermann was prepared to testify live, but did not due to time constraints. His video deposition was played instead.

PREVIOUSLY:

• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Called as a witness for Oracle, Catz reiterated an earlier point made by Oracle CEO Larry Ellison, saying that had SAP licensed the materials that its TomorrowNow subsidiary ultimately pilfered, it would have cost “billions.” She also reminded SAP’s legal team that her email on SAP/TomorrowNow as a competitive threat was written without knowing about TomorrowNow’s copyright infringement.

Worse, she dismissed SAP’s offer of $40 million in damages as laughable. “SAP paying us damages of $40 million would be a reward for their bad behavior. “It’s like taking someone’s $2,000 watch and hocking it for $20, and then offering to give us $20. It’s crazy. It completely undervalues the entire basis for our industry.”

A powerful jab, and one that’s making the rounds in media reports on the trial today.

PREVIOUSLY:

• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

One month after resigning his position at Hewlett-Packard amid allegations of business-standard improprieties, ousted HP CEO Mark Hurd has a new gig: Co-president of Oracle.

Ending a long weekend’s worth of speculation, Oracle on Monday said Hurd will serve as co-president alongside Safra Catz, taking up a role vacated by current president and fellow scandal cultivator Charles Phillips, who has evidently resigned.

“Mark did a brilliant job at HP and I expect he’ll do even better at Oracle,” Oracle CEO Larry Ellison said in statement. “There is no executive in the IT world with more relevant experience than Mark.”

Indeed, Hurd’s knowledge of HP’s (HPQ) server and data-storage-systems business will undoubtedly come in handy at Oracle (ORCL), which has been aggressively moving into that very space ever since its acquisition of Sun. In that sense, Hurd’s hiring is a real coup for Oracle. Who better to put the screws to a rival than a former CEO with a bone to pick?

Perhaps that’s what Larry Ellison was thinking when he spanked HP for canning Hurd. “The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs  many years ago,” he said at the time. “That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them.”

“The Sun integration is going even better than we expected,” said Oracle President Safra Catz. “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 (ORCL) said its net income for the quarter fell to $1.2 billion, or 23 cents a share, from $1.3 billion, or 26 cents a share last year. But revenue rose to $6.4 billion from $5.5 billion. Excluding items, earnings for the quarter were 38 cents a share, which is what analysts surveyed by Thomson Reuters had been expecting.

Two last details worth noting: Revenue from new software licenses rose 13 percent during the quarter. Another sign that enterprise spending on technology is on the rise.

Oracle CEO Larry Ellison is a funny guy. From the company’s earnings release:

“Every quarter we grab huge chunks of market share from SAP,” said Oracle CEO, Larry Ellison. “SAP’s most recent quarter was the best quarter of their year, only down 15%, while Oracle’s application sales were up 21%. But SAP is well ahead of us in the number of CEOs for this year, announcing their third and fourth, while we only had one.”

Oracle Reports GAAP EPS of $0.23, Non-GAAP EPS of $0.38

REDWOOD SHORES, Calif., March 25, 2010 — Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2010 Q3 GAAP total revenues were up 17% to $6.4 billion, while non- GAAP total revenues were up 18% to $6.5 billion. Excluding the impact of Sun Microsystems, Inc., which Oracle acquired on January 26, 2010, GAAP total revenue grew 7%. GAAP new software license revenues were up 13% to $1.7 billion, and up 10% to $1.7 billion excluding Sun. GAAP software license updates and product support revenues were up 13% to $3.3 billion, while non-GAAP software license updates and product support revenues were up 12% to $3.3 billion. GAAP operating income was down 5% to $1.8 billion, and GAAP operating margin was 29%. Non-GAAP operating income was up 13% to $2.9 billion, and non-GAAP operating margin was 45%. GAAP net income was down 10% to $1.2 billion, while non-GAAP net income was up 9% to $1.9 billion. GAAP earnings per share were $0.23, down 11% compared to last year while non-GAAP earnings per share were up 9% to $0.38. GAAP operating cash flow on a trailing twelve-month basis was $8.2 billion.

“Our solid top line growth, coupled with disciplined expense management, was key in generating $8.0 billion of free cash flow over the last twelve months,” said Oracle CFO Jeff Epstein.

“The Sun integration is going even better than we expected,” said Oracle President, Safra Catz. “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.”

“Exadata is the fastest growing product in Oracle’s history,” said Oracle President, Charles Phillips. “Introduced a little over a year ago, the Exadata pipeline is now approaching $400 million with Q4 bookings forecast at nearly $100 million. This strengthens both sales growth and profitability in our Sun server and storage businesses.”

“Every quarter we grab huge chunks of market share from SAP,” said Oracle CEO, Larry Ellison. “SAP’s most recent quarter was the best quarter of their year, only down 15%, while Oracle’s application sales were up 21%. But SAP is well ahead of us in the number of CEOs for this year, announcing their third and fourth, while we only had one.”
In addition, Oracle’s Board of Directors declared a cash dividend of $0.05 per share of outstanding common stock to be paid to stockholders of record as of the close of business on April 14, 2010, with a payment date of May 5, 2010. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of Oracle’s Board of Directors.