Oracle's second quarter was roughly in line with expectations as earnings excluding charges hit targets on lower than expected revenue. Meanwhile, Oracle CEO Larry Ellison, who picks on a competitor every quarter, said the company had "several recent wins over Salesforce.com" for on-demand software.
Oracle reported second quarter earnings of $1.7 billion, or 34 cents a share, excluding charges (statement, tables, preview). That was good enough to hit Wall Street estimates. Sales were a bit light at $5.6 billion--Wall Street was expecting $5.86 billion. Including charges, Oracle reported net income of $1.3 billion, or 25 cents a share, flat with a year ago. For the third quarter, the company expects adjusted earnings of 31-33 cents.
The company noted that the stronger dollar dinged second-quarter earnings, an outcome that was expected. In many respects, Oracle delivered a solid quarter without many surprises. Oracle also didn't announce any broad restructuring plans, but it also has plenty of room to improve margins as it trims fat as it integrates acquisitions such as BEA Systems.
One item to note is Ellison's comments. Almost every quarter Oracle pokes a rival. Usually it's SAP, but Red Hat and BEA have also taken jabs before. This go round Salesforce.com was an Ellison target.
In a statement, Ellison said:
"We signed our largest on-demand sales force automation contract this quarter. This was just one of several recent wins over salesforce.com. We also sold our first database machine, launching an all new and important business for Oracle."
The database machine comment refers to Oracle's venture with Hewlett Packard. Ellison unveiled the database machine at Oracle Open World (right).
In the first quarter, Oracle projected 9 percent to 12 percent revenue growth, 2 percent to 12 percent new software license growth and earnings excluding charges of 35 cents a share to 36 cents a share. The big miss is new software license growth, which fell in the second quarter. By the numbers for the fiscal second quarter:
- Oracle ended the quarter with 86,657 employees, up from 85,188 in the first quarter.
- Software revenue was $4.5 billion, up 8 percent from a year ago.
- New software license revenue fell 3 percent to $1.6 billion.
- Software license and product support revenue jumped 14 percent to $2.9 billion.
- Services revenue fell 2 percent to $1.1 billion.
- Sales and marketing expenses were up to $1.14 billion, up from $1.09 billion a year ago.
- Research and development spending was $651 million, down from $674 million a year ago.
- By geography, Oracle had second quarter revenue of $2.9 billion in the Americas with $1.88 billion from Europe, Middle East and Africa. Asia Pacific revenue was $822 million. All of those figures were up modestly from the first quarter and year ago quarter.
As a percentage of revenue Oracle held its expenses in line with a year ago.
Here's the snapshot of revenue broken down:
And it's clear that Oracle remains a database and middleware driven company.