Oracle Corp., which is facing a delay of its acquisition of Sun Microsystems, today reported first quarter non-GAAP earnings of $1.5 billion, or 30 cents per share, a three-percent increase over the year-ago quarter. Revenue for the quarter was $5.1 billion, a 7 percent drop from last year. Wall Street analysts had been expecting earnings of 30 cents on revenue of $5.25 billion. (Statement, PDF)
First quarter GAAP earnings were 22 cents a share.
The quarter, which is seasonally slow, was largely considered to be ho-hum as analysts largely expected earnings to be in-line with expectations. In its press release, Oracle noted that software license updates and product support revenue grew 11 percent to $3.1 billion and that the growth, along with "disciplined expense management," was key to the $8.5 billion in free cash flow that's been generated over the last year.
Looking ahead, the company issued second quarter guidance of non-GAAP earnings of 35-36 cents per share, up from 34 percent in the year ago quarter. It expects revenue to be between +2 percent and -1 percent, year over year.
The company also noted its gains and compared them to SAP. Said Oracle President Charles Phillips:
We grew faster than SAP in every region around the world, including Europe, where our applications business grew 3 percent in constant currency versus negative 39 percent for SAP's most recent quarter. Our applications team also executed especially well in North America, where our applications business grew 8 percent in constant currency versus negative 50 percent for SAP.
The earnings release comes a day after Oracle and Sun announced a second Exadata data warehousing appliance that was built by Sun. In a statement, Oracle CEO Larry Ellison touted the combination of Sun hardware and Oracle software to create "the world's fastest computer system for OLTP (online transaction processing) and data warehousing."
The Sun acquisition is facing delays over concerns by the European Commission about MySQL. But the delay doesn't seem to be causing much concern on Wall Street. In a note to investors, Piper Jaffray analyst Mark Murphy wrote that the delay may be placing pressure on Oracle and creating some uncertainty for investors, but that most Oracle partners have a positive outlook on the deal. Of those surveyed, 74 percent said they expect a positive outcome from the acquisition. In the note, Murphy wrote:
Partners also indicate "the growing importance of Java alone makes the acquisition extremely valuable," that "Sun has a lot to offer in terms of IP, software, and hardware," and that it will succeed in "protecting their significant database market share on the Sun platform from IBM's DB2 product."
Shares of Oracle were down about 2 percent in regular trading, closing at $22.13. Shares dipped further in after-hours trading, down more than 5 percent.