Software giant struggling to keep clients from freaking out
A day after announcing its Exadata V2 database cluster appliance with Sun Microsystems, software giant Oracle said that its first quarter of fiscal 2010 was more or less what it expected.
For the quarter ended August 31, Oracle’s sales came to just a tad bit over $5 billion, down 5 percent compared to the year-ago quarter, and net income rose by 4 percent to $1.12 billion. Oracle said that sales of new software licenses across its entire range of database, middleware, and application software catalog fell by 17 percent, to a hair over $1 billion in the first quarter. Thanks to a boost in software update and product sales revenues, which rose by 1 percent to $3.11 billion. The real culprit in the quarter was services, which fell by 22 percent, to $909 million.
In a conference call with Wall Street analysts, co-president Safra Catz blamed ERP rivals such as SAP for its decline in database sales, saying that because ERP sales are down, Oracle database and middleware sales are down. Oracle said that new license sales for database and middleware products fell by 22 percent in the quarter, to $711 million, but support and updates for these products had a 9 percent spike, to $2.06 billion. New license sales of Oracle’s own application software were down only 4 percent, to $317 million, in the first fiscal quarter, and application software updates and support revenues were up by 1 percent, to $1.05 billion.
Looking ahead, Oracle expects revenues for its second quarter of fiscal 2010, which ends in November, will be anywhere from flat to up about 3 percent, with earnings per share up a penny or two, to either 26 cents or 27 cents per share.
As for Sun, Catz said that until the European Union approves the acquisition, the only thing that Oracle can do with Sun is to continue to do integration planning and do arm’s length product launches, such as the Exadata V2 database machine, which The Four Hundred discusses elsewhere in this issue.