Exceeding analysts' expectations, software giant Oracle (ORCL)
on Tuesday said its latest quarterly earnings rose 18 percent and its sales
increased 3 percent.
The company said its profit for the second fiscal quarter totaled $2.6
billion on sales of $9.1 billion. It earned 53 cents per share, a 24 percent
jump from the same period a year ago. Analysts surveyed by Thomson Reuters on
average had expected earnings of 48 cents per share.
"The company really delivered a very good quarter that ultimately I think
gives investors even more confidence heading into 2013," said Daniel Ives, a
senior analyst with FBR Capital Markets. "It kind of points to a company that
is showing strong execution and also has the right products at the right
time."
Speaking to analysts in a conference call, Oracle President Mark Hurd
said, "we had a great quarter in software. It was better than we expected,
with double digit growth in every region." He attributed that partly to Oracle
having greatly bolstered its sales force in recent months, noting that it's
still hiring in that area.
Before Oracle reported its earnings, its stock price rose 56 cents, or
nearly 2 percent, to close at $32.88 in regular trading. Following the
announcement, it went up another 51 cents in after-hours trades to $33.39.
Oracle is one of the world's largest sellers of business-oriented
database programs and other software. It recently has bought several companies
to bolster its offerings of Web-based software applications to help companies
better manage their businesses. But it has faced growing competition from
other software firms providing similar services.
Oracle also sells servers and storage equipment, which it acquired by
buying Sun Microsystems in 2010. Although sales of these hardware products
remain modest, they reportedly are attracting growing interest from customers
-- especially Oracle's Exadata line, which combines hardware with software for
high-performance data processing.
Some industry experts have a cheery view of the company's prospects.
In a recent note to their clients, analysts with Credit Suisse said
Oracle's products "continue to experience strong demand," and they gave a
thumbs up to its "long-term corporate strategy and management's ability to
execute."
Wells Fargo analysts added in a note this week that as Oracle integrates
the products it recently acquired by buying two companies -- RightNow and
Taleo -- "we see opportunity for improved gains" in the Redwood City company's
balance sheet.
Others see troubling signs for Oracle's business, however.
In a recent report. Jefferies analyst Ross MacMillan noted that while
Oracle's database business "is doing OK," he hears some of Oracle's potential
customers may be looking elsewhere for less-expensive alternatives.
In another report, tech analyst Rob Enderle said some businesses may be
lured away from Oracle by EMC and IBM, which have been introducing products
"to displace both Oracle hardware and software."
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