Oracle 3Q Profit Climbs 18% On Growth From New Licenses

Oracle Corp.'s (ORCL) fiscal third-quarter profit rose 18% as new licenses from the technology giant's software business continued to offset weaker hardware revenue.

Shares rose 2.1% to $30.75 after hours on a stronger-than-expected core profit. Oracle's shares had climbed 17% so far this year through Tuesday's close.

Strength in Oracle's traditional software business has led to improved earnings over the past year, offsetting weak top-line results in the company's hardware segment. The technology giant has aggressively promoted its line of server equipment following its $7.4 billion acquisition of Sun Microsystems in 2010, though revenue from the hardware business has lagged other segments and continued to decline in the latest quarter.

Oracle, in its more recent acquisitions, have focused on makers of web-based software, otherwise known as the cloud. Those purchases include a $1.5 billion deal in October for RightNow Technologies Inc., a maker of customer-management software, and a $1.9 billion deal last month for Taleo Corp. (TLEO), a provider of human-resources software.

The recent buyouts reflect software developers' growing interest in products delivered as a service from a network of servers. So-called cloud-computing products let companies avoid many of the costs associated with installing and maintaining their own software.

The latest results faced a tough comparison against the 78% profit jump reported a year earlier, when the company's software revenue surged and hardware sales more than tripled.

For the quarter ended Feb. 29, Oracle posted a profit of $2.5 billion, or 49 cents a share, up from $2.12 billion, or 41 cents a share, a year earlier. Excluding stock-based compensation, acquisition costs and other effects, per-share earnings rose to 62 cents from 54 cents.

Revenue climbed 3.1% to $9.04 billion. In constant-currency terms, the top line grew about 4%.

Oracle's December forecast called for a per-share profit between 56 cents and 59 cents with 2% to 5% revenue growth.

Operating margin widened to 36.7% from 34.1%.

New license revenue, a key measure of software growth, increased 7.2%. Total software revenue rose 7.9%, while revenue at the much-smaller services segment edged down 0.4%. Hardware segment revenue declined 11%.

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; [e-mail]