Oracle’s Results Exceed Estimates

Database software giant Oracle Corp. on Wednesday posted quarterly earnings and sales that beat its own cautious forecasts, as the company said it believes the worst is over.

For its fiscal second quarter ended Nov. 30, Redwood Shores, Calif.-based Oracle posted net income of $535 million, or 10 cents a share, down 2.6% from $549 million, or 10 cents a year earlier.

Total revenue slipped to $2.31 billion from $2.38 billion a year earlier, but was higher than the company’s previous guidance as international business, excluding that in Japan, improved.

“We think the quarter we’re in now will be better than the quarter we just finished. We’ll show some top-line growth this quarter,” Oracle Chief Executive Larry Ellison told Reuters.

Oracle Chief Financial Officer Jeff Henley was equally upbeat: “We are more optimistic right now than we’ve ever been since the industry slumped two years ago.”

Oracle said it expects earnings of 9 cents to 10 cents a share in the current quarter, versus 9 cents a year ago.

The company’s shares rose to $11.35 in after-hours trading, following the earnings report. In regular trading they had fallen 39 cents to $10.63 on Nasdaq.

“They did even better than people were hoping,” said JMP Securities analyst Pat Walravens.

Sales from software license updates and product support contracts rose 8% to $954 million, while new licensing revenue was down 7% to $765 million and services revenue was down 11% to $590 million.

Oracle’s report may signal that companies are starting to buy business software again after a slump that’s lasted almost two years, investors said. Database software is used to store and sort information.

“Eighty percent of this story is database. If they can keep growing the database side of the business, that gives them quite a bit of leeway” to fix weaker sales in applications software, Walravens said.

Sales of applications, used to manage tasks such as accounting and customer relations, fell 34% to $108.1 million in the quarter, a steeper decline than in the first quarter, when they fell 24%.