Oracle's first quarter allays worries

Oracle reported first quarter earnings that topped expectations as new software licenses were in line with estimates. Revenue, however, was light.

In a statement Thursday, Oracle said it reported earnings of $1.1 billion, or 21 cents a share (preview). Excluding charges, Oracle reported earnings of $1.5 billion, or 29 cents a share. Revenue was up 18 percent from a year ago to $5.3 billion. Wall Street was looking for earnings of 27 cents a share excluding items on revenue of $5.42 billion, according to Thomson Reuters.

Oracle will provide its outlook on its conference call. Sam will be back with live coverage.

New software license revenue was up 14 percent to $1.2 billion. CEO Larry Ellison touted Oracle's database market share, which came in at 49 percent according to Gartner.

By the numbers for the first quarter:

• New software license revenue was $1.24 billion, up 14 percent from $1.08 billion a year ago. Software license updates and support revenue was $2.93 billion, up from $2.38 billion a year ago.
• Revenue from the Americas was $2.68 billion, up from $2.37 billion a year ago. Europe, Middle East and Africa had revenue of $1.83 billion, up from $1.53 billion a year ago. Asia Pacific revenue was $814 million, up from $624 million a year ago.
• Applications revenue was $1.37 billion with database and middleware revenue of $2.8 billion.
• Oracle ended with 85,188 employees.

The initial reaction was positive.

update: A conference call with analysts was relatively upbeat, given the current events around Wall Street. One of the overlying messages was that Oracle's products remain critical to business-as-usual and that businesses - despite the challenges they may face in the aftermath of Wall Street's problems - must keep doing what they're doing.

One of the bright spots is the maintenance agreements that allow customers to receive the latest software versions. Executives said it's rare for a customer to not renew a maintenance agreement. Software is the key to running their businesses and, while customers may tighten the belt to ride the economic rollercoaster, it's likely to be in other areas - not mission-critical software tools. In terms of new business and expansion, the customers who buy tend to be existing customers who are already happy with what they have and are looking to expand.

The company was asked about a general softening of the market and its impact on them. While no one can see into the far away future, executives said, there's general optimism that the momentum around a broad product line could help shelter Oracle from these latest storms. Case in point: some 40,000 people expected to attend next week's Oracle OpenWorld. That's a positive sign, the company said.

For its current second quarter, the company said it expects revenue to grow 9-12 percent, including a 3-point adjustment from currency fluctuation. Not counting the fluctuation, growth is expected to be 12-15 percent. New software license revenue is expected to grow between 2-12 percent, adjusted for currency fluctuation. Without the adjustment, new software license revenue should grow 5-15 percent. The company expects earnings of 35-36 cents a share for the quarter.

In after-hours trading, shares of Oracle were up about 6 percent to $19.89.