Oracle Q1 Revenues Decline, But Operating Profit Up 14%

Software license revenues decline, while software license updates and product support revenues rise

Oracle has reported a decline of 5% in total revenues to $5.1 billion in its first quarter of fiscal 2010 compared to $5.3 billion in the same quarter of the prior year. Software license revenues were down 17% to $1billion. Software license updates and product support revenues were up 6% to $3.1 billion.

For the quarter, operating profit was up 14% to $1.7 billion compared to $1.5 billion in the first quarter of 2008. The company's operating margin was up 590 basis points to 34% of revenues compared to 29% of revenues in the same period last year.

Oracle reported net profit of $1.1 billion compared to $1.07 billion in the same quarter of the prior year. Earnings per share were $0.22 up 8%, compared to the same period last year.

Safra Catz, president of Oracle, said: “By substantially improving operating margins we were able to increase Q1 earnings per share even though revenues decreased slightly. We grew non-GAAP operating margins by 570 basis points to 46% in our seasonally smallest quarter.”

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Oracle Wanted Sun's Software Unit Only, Records Show

Larry Ellison's protestations to the contrary notwithstanding, Oracle may have been forced to buy the whole company to close deal.

Despite CEO Larry Ellison's claim that Oracle (NSDQ: ORCL)'s acquisition of Sun Microsystems (NSDQ: JAVA) will give his company the ability to construct unmatched business systems that are integrated from "applications to disk," Oracle originally sought to acquire only Sun's crown-jewel software assets while leaving its declining hardware unit to the vultures, according to a regulatory filing.

Oracle on March 12 "sent a letter to our board proposing the acquisition by Oracle of certain of our software assets, a minority equity investment by Oracle in our common stock, and entering into certain strategic relationships," Sun said in a filing Monday with the Securities and Exchange Commission.

The ultimate outcome of the negotiations differed greatly from Oracle's original offer. Oracle on April 19 struck a deal to acquire all of Sun -- including its aging line of Solaris-powered Sparc servers -- for $7.4 billion, or $9.50 per share.

So why did Oracle agree to a big-bucks deal for a vendor that derives most of its sales from a declining box business? The SEC filing shows that Oracle's hand may have been forced by IBM, which was engaged in its own merger talks with Sun earlier this year, and by yet another vendor -- possibly Hewlett-Packard.

Sun's filing notes that in addition to Oracle, its springtime suitors included "Company A" and "Company B." A is widely believed to be Big Blue, while B, most logically, is HP. It thus appears that Oracle grudgingly acquired Sun's hardware line just to get its hands on the ubiquitous Java Web development platform -- and keep it from IBM (NYSE: IBM)'s possession.

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What Oracle Would Get With Sun Acquisition

The acquisition of Sun Microsystems (NSDQ:JAVA) by Oracle (NSDQ:ORCL), if it is closed as expected, would give Oracle a company whose business model has been rocky but would bring it some of the industry's top hardware and software technology and strengthen its open-source offerings.

Oracle on Monday said it plans to acquire Sun in a $7.4 billion deal announced shortly after an earlier bid by IBM (NYSE:IBM) to acquire Sun fell through.

Oracle and Sun have had complementary businesses for years, and a significant if not majority portion of Oracle's installed base has been on Sun hardware and Sun's Solaris operating system.

The proposed acquisition of Sun would force Oracle to decide how much of a hardware vendor it wants to be, as the software side of Sun is very compatible with Oracle's product offerings.

Oracle is one of the IT industry's largest software vendors, with core competencies in databases, middleware and other business applications, and an acquisition of Sun would bring a wide range of complementary technologies with limited overlapping of its existing products.

Sun would bring Oracle the MySQL database, based on open-source technology. Sun currently provides the MySQL database as a free download, with customers paying Sun and/or its solution providers for support.

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Report: Oracle Slashes 500 Jobs

Software giant Oracle reportedly cut approximately 500 jobs in North America last Friday, according to published reports.

The Wall Street Journal Wednesday said the affected employees were in the company's software sales and consulting businesses in database management.

The paper cited inside sources, although an Oracle spokesperson declined to comment. The supposed jobs cuts, however, are fewer than the rumored 10 percent that was whispered on Wall Street.

With the reported job cuts, Oracle joins other tech companies slammed by the weak economy, most notably Nortel, which sought bankruptcy protection Wednesday. Other tech heavyweights that are also feeling pain include Lexmark, EMC, SAP, Nvidia and Seagate.

Last month, Oracle reported second-quarter results for the period ended Nov. 30, with an increase of 6 percent year-over-year to $5.6 billion. However, net income fell 1 percent to $1.3 billion. Revenue also took a hit, falling 3 percent to $1.6 billion.

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Oracle sells hosted call center software

MANILA, Philippines -- Oracle is now selling the Web-based model to call centers as a means of addressing challenges such as agent attrition and low customer satisfaction.

Oracle, which has built its enterprise software business on packaged products, is selling a solution called "Contact Center Anywhere" (CCA).

As its name implies, the solution can be deployed via a hosted model, or allowing a contact center to run different communication channels such voice-based telephony or email on a single IP-based infrastructure.

The product can be deployed as a multi-site solution or as an on-premise single-site solution with built-in switching and network support, according to Oracle.

One of the current challenges faced by contact centers in India, China and the Philippines is how to upgrade existing infrastructure to handle increasing customer service requirements, according to a study by industry monitor Callcentres.net.

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Oracle net profit jumps, but outlook cautious

BOSTON (Reuters) - Oracle Corp (ORCL.O: Quote, Profile, Research) reported a 27 percent rise in quarterly profit as sales of new software beat expectations, but the company gave a cautious outlook citing economic uncertainties, and its shares fell 3 percent.

Oracle, whose shares had been near a seven-year high, posted May quarter results that topped Wall Street estimates on virtually all measures. But the company cautioned that while business is growing, deals are taking longer to close than they have historically as customers are giving them more scrutiny.

"Bit more cautious environment. But ... we have a big enough pipeline hopefully to get through it all," Oracle President Charles Phillips said on a conference call.

Oracle gave forecasts for its fiscal first quarter, ending in August, roughly in line with expectations. It saw revenue growing 18 percent to 20 percent, net income at 17 to 18 cents per share, and earnings excluding items at 26 to 27 cents.

Analysts, on average, were looking for earnings excluding items of 27 cents per share, according to Reuters Estimates.

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