Oracle Delivers in Q4

But cautious on upturn

Oracle Corp said it did not expect any short term rebound in the corporate IT market yesterday as it delivered fourth quarter yesterday that surpassed expectations.

The Redwood City, California-based software giant said that as the economy continues to turn around, it expects its business to pick up. However, this is not likely to feed through to its market until next year.

Sales for the quarter ending May 31 were down 15.7% to $2.8bn. However, license sales dropped sharply, down 29.2% to $1.2bn. The company's services revenues came in at $1.6bn, compared to $1.63bn a year ago.

Operating profits were down 5.3% to $1.2bn, while net income was off 23.3% to $655.9m. This meant earnings per share of $0.12, or $0.14 once an impairment charge on the company's investment in Liberate Technologies was excluded. Wall Street had been expecting the company to turn in $0.12 per share, on revenues of $2.5bn.

The better than expected performance came just a few weeks after Oracle CEO Larry Ellison was forced to dampen down rumors the company was set to turn in a worse than expected performance.

Despite the better than expected performance, Oracle's CFO Jeff Henley was loath to predict any early upturn in the industry. He said the firm anticipated the US economy would improve gradually, which would feed through to an improvement in IT spending.

However, he said IT spending would not feel the impact for around six months, and the company does not expect to see growth until the second half of its fiscal year. However, this does mean the company expects its 2003 fiscal full year to show some growth.

Henley said the company expected to see license revenues slip 15% to 25% in the first quarter, with earnings per share coming in at $0.07, or $0.06 if license revenues are at the low end of expectations. Wall Street was expecting earnings of $0.09 per share.

In the meantime, Ellison was concerned to quash any impression the company was losing market share to IBM. He detailed a number of ways in which market surveys which showed IBM gaining share could be misconstrued. "I feel we're gaining share from IBM," he insisted, saying that people were if anything, buying more Oracle software.

When asked about rumors that the company was casting around for a new head of sales or chief operating officer, he said no such search was underway, although he joked "it's possible I don't know."

For the full year, Oracle's sales were down 11.8% to $9.7bn. Net profits were down 13.2% to $2.2bn.

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