Oracle's net rises 36 percent, but servers slip

September 20, 2011 By JORDAN ROBERTSON , AP Technology Writer
This March 22, 2011 file photo, the exterior of Oracle headquarters in Redwood City, Calif. Oracle Corp. is scheduled to report quarterly financial results Tuesday, Sept. 20, 2011, after the market close.(AP Photo/Paul Sakuma, File)

(AP) -- Stronger spending on business software helped Oracle Corp.'s quarterly profit jump 36 percent, but the company's server business further deteriorated, a decline Oracle attributed to its move to shed lower-margin deals.

The company said after the stock market closed Tuesday that its net income rose to $1.84 billion, or 36 cents per share, in the quarter that ended Aug. 31. That compared with $1.35 billion, or 27 cents per share, a year earlier.

Its adjusted net income for the latest quarter was 48 cents per share, a penny higher than the average forecast of analysts polled by FactSet.

Revenue rose 12 percent to $8.37 billion, slightly exceeding the $8.36 billion that analysts expected.

Revenue from new software licenses rose 17 percent to $1.5 billion, which was the top end of the range Oracle had predicted. But revenue from servers fell 5 percent to $1 billion, which was at the bottom of the range Oracle had forecast for that category.

Those two figures in particular reflect the tension in Oracle's push to become a more well-rounded technology seller.

The Redwood Shores-based company is the world's leading seller of database software, which helps companies organize their information. It's also one of the leading sellers of business applications, which help companies do things with their data. The businesses are highly lucrative. Software maintenance fees make up nearly half of Oracle's overall revenue.

Oracle's attempt to resurrect Sun Microsystems, a former dot-com star that makes computer servers, hasn't gone as smoothly. After Oracle bought Sun for $7.3 billion last year, Oracle warned investors that it was going to shed unprofitable deals. It has indeed done that. But uncertainty about Oracle's plans for Sun has allowed rivals to pounce, raising fears that Oracle's market share losses in servers aren't entirely voluntary.

Mark Hurd, an Oracle co-president who was Hewlett-Packard Co.'s CEO until last year, said in a statement that Oracle's high-end servers delivered "solid double-digit revenue growth" in the latest period, Oracle's fiscal first quarter. Meanwhile, revenue in the low-end server business declined. By focusing on the high-end segment, the company was able to increase the overall profitability of the hardware business, he said.

Investors have been concerned about Oracle's server declines. The stock is down more than 20 percent since its 52-week high of $36.50 in May.

The shares fell 67 cents, or 2.3 percent, to close at $28.35 on Tuesday. After the earnings were announced, the stock gained 55 cents, or 2 percent, to $28.90.

Explore further: Oracle's profit tops Street, but worries surface


Related Stories

Oracle's profit tops Street, but worries surface

June 23, 2011

(AP) -- Oracle Corp.'s latest quarterly results Thursday underscore the critical role its software business plays despite its push to become a more well-rounded technology vendor by selling computer servers.

Oracle fiscal 3Q net income up 78 pct

March 24, 2011

(AP) -- Database software maker Oracle Corp. said Thursday its net income rose 78 percent in the fiscal third quarter, helped by a rise in new software license sales and the benefit of three full months of revenue from Sun ...

Oracle profit slips, but software revenue rises

March 25, 2010

(AP) -- Oracle Corp.'s profit fell 10.5 percent in the latest quarter as the business software maker absorbed Sun Microsystems and its expenses for building and supporting computer servers.

Oracle's net jumps 25 pct in first full Sun qtr

June 24, 2010

(AP) -- Oracle Corp.'s net income jumped 25 percent in the most recent quarter as CEO Larry Ellison trumpeted momentum in the company's efforts to sell computer hardware and in its showdown with IBM Corp.

Oracle reports profit jump, bucking industry fears

December 16, 2010

(AP) -- Oracle Corp.'s net income jumped 28 percent in the latest quarter, its biggest increase in more than two years and another sign that companies are spending more liberally on technology.

TI 2Q revenue rises 42 pct as demand roars back

July 19, 2010

(AP) -- Texas Instruments Inc.' second-quarter income and revenue jumped as demand continued to recover after the recession. The company predicted even better results in the new quarter.

Recommended for you

Top takeaways from Consumers Electronics Show

January 13, 2018

The 2018 Consumer Electronics Show, which concluded Friday in Las Vegas, drew some 4,000 exhibitors from dozens of countries and more than 170,000 attendees, showcased some of the latest from the technology world.

Finnish firm detects new Intel security flaw

January 12, 2018

A new security flaw has been found in Intel hardware which could enable hackers to access corporate laptops remotely, Finnish cybersecurity specialist F-Secure said on Friday.

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Sep 20, 2011
Everyone I know in the IT industry is running away from Oracle Hardware. The beneficiaries of this seem to be HP, IBM and Dell.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.