Oracle hits high note in Q3

Fueled by sales of database licenses, Oracle Corp. yesterday reported a 9% jump in Q3 sales. At the same time, CEO Larry Ellison confirmed that Oracle's fight to acquire PeopleSoft Inc. is costing the company a sizable chunk of change.

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Oracle Corp. hit its third-quarter targets and met Wall Street expectations. The company was bolstered by growth in database sales and licensing revenue.

The company reported that third-quarter sales increased 9%, to $2.5 billion, compared with the same period a year ago. Profits rose 11%, to $635 million, coming very close to Wall Street expectations.

"We think our products are becoming more competitive in the marketplace," said Larry Ellison, Oracle CEO, speaking during a conference call yesterday. "We're growing faster than SAP in applications, and a lot faster then the combined entity of PeopleSoft and J.D. Edwards."

The conference call offered a bit of positive news against the backdrop of Oracle's battle with the Department of Justice, which has filed suit against the software company in order to block Oracle's attempts to acquire PeopleSoft Inc.

We're growing faster than SAP in applications, and a lot faster then the combined entity of PeopleSoft and J.D. Edwards.
Larry Ellison
CEOOracle Corp.

Ellison said that the growth in Real Application Cluster (RAC) sales indicates acceptance of the grid capabilities of Oracle 10g, which began shipping this year, and the success of Oracle's RAC on Linux strategy.

"When someone wants to deploy a grid of computers, the component you buy from Oracle is RAC," Ellison said. "We are selling RAC very successfully -- on low-cost hardware."

Noel Yuhanna, a senior industry analyst with Cambridge, Mass.-based Forrester Research, said he expects customers to begin buying the 10g database about two years from now, after the initial bugs are worked out.

A less expensive version of 10g, aimed at small and midsized businesses, may help Oracle take market share in the SMB space away from Microsoft, Yuhanna said, especially now that Microsoft customers have been told they must wait until the first half of 2005 for the newest release of SQL Server to arrive.

"Certainly businesses aren't going to immediately make the switch to Oracle," Yuhanna said. "But it will give companies another opportunity to consider Oracle."

Revenue from software license updates and product support was up 17% to $1.18 billion, Oracle said.

At the same time, the price of the company's fight to acquire PeopleSoft is growing, Ellison said. The cost of the battle rose to $43.4 million during the last nine months, according to Oracle.


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To provide feedback on this article, contact Robert Westervelt.

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