Oracle 2Q Profit Up 28%; Results Topped Co's Guidance

   DOW JONES NEWSWIRES 
 

Oracle Corp.'s (ORCL) fiscal second-quarter earnings rose 28% as the business-software giant continued to see strength in both its traditional software side and its new hardware business.

Shares were up 4% at $31.47 after hours as the results beat the company's guidance. Through the close, Oracle shares have climbed 23% so far in 2010, outpacing the wider market.

The company, which also sells database systems and now server hardware through its $7.4 billion acquisition of Sun Microsystems in January, bolstered earnings in the most recent period through strong revenue growth and "disciplined business management," according to President Safra Catz on Thursday.

The latest results continue a pattern of broad-based strengthening in its software business combined with accelerating performance in the new hardware operations. Last month, Oracle agreed to pay nearly $1 billion for Art Technology Group Inc. (ARTG), which would expand the company into e-commerce software.

For the quarter ended Nov. 30, the company posted a profit of $1.87 billion, or 37 cents a share, from $1.46 billion, or 29 cents a share, a year earlier. Excluding stock-compensation, restructuring and acquisition-related costs, earnings rose to 51 cents a share from 39 cents.

Revenue increased 47% to $8.58 billion, while, in constant-currency terms, it rose 48%. Roughly half the company's revenue originates in markets outside the U.S.

In September, Oracle predicted earnings of 44 cents to 46 cents a share and revenue growth of 42% to 47% in constant currency.

Operating margin narrowed to 32% from 37% as the lower-margin hardware business dragged down the percentage, although the margin in the hardware business itself improved.

New license revenue, a key measure of software growth, rose 21%. The hardware business contributed $1.75 billion to the top line, representing about 20% of total revenue. Total software revenue grew 15%, and the much-smaller services segment had a 23% jump.

The company won a record $1.3 billion copyright-infringement verdict against rival SAP AG (SAP, SAP.XE) in November. A month prior, Oracle updated its copyright and patent-infringement lawsuit against Google Inc. (GOOG), claiming some of the Internet search giant's Android mobile-phone software was "directly copied" from the business software maker's Java code.

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; [e-mail]