Oracle on Thursday delivered a strong second quarter and said its Exadata pipeline is nearing the $2 billion mark. CEO Larry Ellison made it clear that Oracle's biggest target is Hewlett-Packard.
Oracle reported fiscal second quarter earnings of $1.87 billion, or 37 cents a share, on revenue of $8.6 billion. Non-GAAP earnings were 51 cents a share. Wall Street was looking for earnings of 46 cents a share on revenue of $8.34 billion.
The company said that new software license revenue growth in the third quarter will be 10 percent to 20 percent. Total revenue growth will be 31 percent to 35 percent. Non-GAAP EPS for the third quarter will be 48 cents a share to 50 cents a share, better than the 46 cents a share expected by Wall Street.
On the earnings conference call, Ellison made it clear that HP was the primary target. Ellison said:
We think IBM's hardware and software technology is quite competitive. While HP's servers are slow, expensive and have little or no software value add. That makes HP extremely vulnerable to market share losses in the coming year. Over the last year or so, we've introduced three new families of high end servers. Exadata, Exalogic and this past quarter SPARC Superclusters. All these high end servers are engineered to run our data database. We expect overall that our new generation of Sun machines, Exadata, Exalogic and SPARC Superclusters will enable us to win significant share in the high end server market. And put us into the number two position behind IBM, very, very soon. Then we'll fight it out with IBM for the number one spot.
He added that Exadata---and ultimately Exalogic---will become the iPhone of high-end enterprise hardware when it comes to integrated hardware and software. Ellison said:
IBM does have a lot of software. HP does not. Emphasize, that makes them particularly vulnerable. But the notion of engineered systems, hardware and software that works together, I believe is going to dominate the high end of the business. By the way, it's already dominating the low end of the business because I suspect you use either an Apple iPhone, an iPad or an Android, where specifically in the case of iPad and iPhone, they're engineered to work together. Android, not so. You decide which which is delivering a better overall experience between those two products on the low end.
Oracle president Mark Hurd said that the plan is to aim Exadata at the company's 295,000 database customers. "Customers can gain 15 to 50 times the improvement with Exadata. We are seeing a lot of enthusiasm and beginning to build order backlog for Exalogic which will be available next quarter, both Intel and SPARC versions," said Hurd.
Among the key data points for the second quarter:
- New software license revenue was up 21 percent to $2 billion.
- Software license updates and product support revenue was $3.6 billion, up 12 percent.
- Hardware system revenue was $1.1 billion. Exadata has been sold in 50 countries.
- Database and middleware revenue was $3.86 billion, up 17 percent from a year ago.
- Applications revenue was $1.78 billion, up 12 percent. Of that sum, software license updates and product support revenue was $1.2 billion.
- The company ended the quarter with 105,730 employees.
Earlier Thursday, Oracle launched Open Office 3.3 and an effort called Cloud Office.
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