Larry Ellison may be the bad boy of enterprise software who many try to dismiss as a techie loudmouth, but today he confounded his critics by delivering stunning second quarter results.
Wall Street expected a profit of $0.22 per share, but today Oracle weighed in with $0.26, astounding even its sternest critics.
The Redwood Shores, California, company said net income for the quarter ending 30 November rose 40 per cent to $384.5 million from $274.1 million a year earlier. Revenue grew 13 per cent to $2.32 billion from $2.05 billion a year earlier.
Earlier this week analysts were worried that Oracle had been whispering a little too loudly about its expected results and were making ready to mark Oracle down on less than expected performance.
On this outing, Ellison and his close associates have shown just how well they know how to play the market analysts when good news is a coming. Strong database and applications revenue figures closed the book on a year that was plagued by concerns over Y2K, a problem with two-digit dates in computer programs that has forced companies to spend billions of dollars on remediation.
Analysts had predicted that some potential Oracle customers would hold back on technology upgrades and expansion until 2000, but this has proven to be wrong.
In typical fashion, Ellison quipped that "You ain't seen nothing yet" during the analyst call.
Oracle has been under pressure in its database business from IBM as it not only signed up key enterprise vendors such as Siebel and SAP but ramped up marketing of its ebusiness infrastructure. These results indicate that Oracle not only continues to catch the database mind share but has leapfrogged its applications competitors in the process.
Applications revenue was up a massive 31 per cent, far and away the best performance so far of the global enterprise vendors and largely driven by the burgeoning customer relationship management market. Service revenue grew a modest 10 per cent, delivering on Ellison's promise to turn Oracle into a serious applications business.
The analyst call showed that Oracle is starting to deliver on its promise to reduce costs by $1 billion. In the long term, this potentially provides excellent value to Oracle investors because it demonstrates the company's ability to not only talk a good story, but deliver on it.
Oracle is well known for selling in advance of delivery but it seems that US customers especially have been sold on the near term delivery story of Oracle 11i and have voted with their chequebooks. The issue now is whether Oracle, with arguably the broadest applications portfolio set of any of the major enterprise vendors, manages to deliver measurable value over the next year.
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