Oracle on Thursday is expected to deliver strong second quarter results, but applications revenue will be closely watched ahead of the Fusion rollout in 2011.
Wall Street is expecting Oracle to report second quarter earnings of 46 cents a share on revenue of $8.34 billion. Analysts widely expect Oracle to top estimates.
Piper Jaffray analyst Mark Murphy said in a research note that Oracle's quarter was above plan based on interviews with 37 resellers. Based on Murphy's survey most partners saw a better pace of business for Oracle. Here's Murphy's scorecard of Oracle product momentum.
Here are the key mileposts for Oracle:
Middleware and DB 11g sales. Analysts report healthy sales of database upgrades and Fusion middleware. Barclays Capital analyst Israel Hernandez expects technology license revenue to come in at $1.36 billion in the second quarter. That tally is up 16 percent from a year ago, or 10 percent excluding Sun Microsystems.
We asked contacts to rate 9 major Oracle products on their momentum with customers and prospects, on a scale of 1 to 5. Oracle Database 11G and Fusion Middleware ranked at the top, with 3.81 and 3.75 ratings respectively. We conclude that any competitive threats in the database arena are falling short while the 11G product cycle gains traction, and that Oracle's emerging strength in middleware continues to resonate with customers.
Applications sales. JMP Securities analyst Patrick Walravens said that his "checks are more mixed" when it comes to Oracle's applications sales. Those checks indicate that Oracle customers are either pausing ahead of the launch of Fusion upgrades in 2011 or that they are considering software as a service options.
Exadata momentum. Like recent quarters, you can expect Larry Ellison and Mark Hurd to talk---actually more like gush---about Exadata and Exabyte machines. Analysts say Exadata is gaining momentum in financials, however, many of these deployments are still in the pilot stage. "Our checks indicate that Exadata is having success in server consolidation projects replacing legacy hardware platforms such as IBM, HP and EMC though volumes remain small relative to the server installed base," said Hernandez.
Our due diligence around Exadata suggests that in some regions Oracle's sales representatives are being asked to sell at least three Exadata boxes this fiscal year, which underscores Oracle's determination in this market, in our opinion.
Europe and state and local government demand likely to lag. Analysts say Europe remains an issue although there was some improvement throughout the quarter. In the U.S. demand was strong on the coasts, but the Midwest lagged. Healthcare and financial demand was strong, according to Hernandez.