Oracle Profits Jump 25% In Q4, Sun Is Seen As Key

4 minute read
David Roe avatar

If there was a certain amount of hand-wringing at this year's IOUG conference over how Sun would integrate into Oracle’s (news, site) portfolio from a technology perspective, from the financial side there were no such discussions. The deal is being cited as one of the principal reasons why the software giant has seen its profits grow by 25% in the fourth quarter.

In a statement accompanying the results, Oracle president Safra Catz said growth could be attributed to increased demand for software licenses as well as US $400 million in operating profit accrued by Sun over the course of the quarter.

Sun Hits Targets

The Q4 results, which were published late on Thursday, were in line with predictions, but more importantly, Catz said, the company is on the way to “ meet or exceed” Sun's goals for the 2011 and 2012 fiscal years.

In a conference call around the earnings, CEO Larry Ellison underlined the company’s plans for Sun and said that over the course of the year Oracle would be doubling the number of sales people that would be selling Sun products exclusively.

This compares with a loss of US $2.2 bn in the last year Sun operated as an independent company largely as a result of the decline in sever spending that accompanied the economic downturn of the past two years.

Oracle, IBM And SAP

And an Oracle earnings release just wouldn’t be right without reference to rival SAP (news, site). Speaking on market share and SAP, co-president Charles Philips claimed they continued previous trends by taking “large chunks of market share” from SAP.

Over the last twelve months Oracle’s applications business has grown 5%. . . while SAP’s business has declined 24% over their previous four quarters. This trend has been going on for a long time: Oracle’s applications business has grown 60% in the last four years while SAP’s business is 7% smaller than it was four years ago,” he said.

IBM was also in the crosshairs this time with Ellison adding that they had beaten IBM (news, site) 30 times on sales during the course of the year and that in some cases they had sold directly into IBM strongholds.

Version 2 of our Sun Exadata database machine outperforms IBM’s fastest computer in both data warehousing and transaction processing . . . some of IBM’s largest customers began buying Exadata machines rather than big IBM servers in Q4 of FY2010. And the FY2011 Exadata sales pipeline is fast approaching the $1 billion mark,” Ellison said.

Oracle Q4 Profits

Whatever about the grand-standing, the figures from Oracle speak for themselves. Year-on year figures for the quarter ended May 31 show:

Learning Opportunities

  • Profits of US $2.36 billion up from US$ 1.89 billion
  • Revenue grew 39% to US$ 9.51 billion.
  • Sales of new software licenses rose 14% to US$ 3.14 billion
  • Sales of hardware of US $1.23 billion

Oracle’s Sun Acquisition

For financial observers watching Oracle, the big question was how the US $7.4 bn Sun acquisition in 2009 was going to pay off.

Early signs in the third quarter -- the first full quarter of Oracle ownership -- indicated that the pay-off was going to be substantial as Oracle's revenue hit US $6.4 billion -- of which 10% could be attributed to one month of Sun revenue.

Oracle said at the time that Sun had performed beyond expectations and contributed handsomely to Oracle’s strong growth. And this quarter has followed suit.

What remains to be seen over the coming months is how the technology will be integrated with some steps already made in the shape of the upgrade to Oracle’s Enterprise Management platform to 11g and May extension of its PartnerNetwork (OPN) with training modules encompassing both Oracle and Sun technologies.

The acquisition of Sun is about building an integrated technology stack by bringing together all the different elements from different sources including Sun, with databases, middleware and hardware. It looks like being a long process and in small steps, but with Sun performing under the Oracle banner, ultimately a profitable one.

If you want to hear more about the figures, Oracle has provided awebcast of the earningsconference.

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