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Oracle Surviving Sun Just Fine, Thank You
Oracle doesn't look like it's choking on Sun any
By: Maureen O'Gara
Jun. 24, 2010 10:00 PM
Oracle doesn't look like it's choking on Sun any.
It beat the Street and its own projections Thursday when it reported its fiscal Q4 numbers. Revenue was up 39% and income was up 25%. That translates into a record 46 cents a share on $9.5 billion - 60 cents non-GAAP on expectations of 54 cents - with new software licenses up 14% to $3.1 billion. License updates and product support revenues were up 12% to $3.4 billion.
Oracle estimates that Sun reduced its $3.3 billion operating income by approximately $100 million, including $176 million of amortization, and contributed about $400 million to non-GAAP operating income, which was up 26% to $4.4 billion.
It was Oracle's first full quarter with Sun in tow.
CFO Jeff Epstein said in a statement, "We executed better than expected on both the top and bottom line for the quarter. This strong performance plus disciplined business management led to a non-GAAP operating margin of 46% in Q4, fully including the $1.2 billion of Sun systems hardware that we sold in the quarter."
Citing Sun's $400 million contribution, president Safra Catz said, "This compares with a loss in Sun's quarter ending June of last year, when Sun was an independent company. Now that Sun is profitable, we have increased confidence that we will meet or exceed our goal of Sun contributing $1.5 billion to non-GAAP operating income in FY2011, and $2 billion in FY2012."
Catz pointed out that Oracle had dumped hundreds of millions of dollars worth of third-party gear that Sun sold. She also said that Oracle was getting a handle on Sun's supply chain. She said Oracle will need a year to understand Sun's seasonality and conversion rates.
CEO Larry Ellison bragged that the Sun Exadata database machine was being bought by some of IBM's largest and bluest accounts like Bank of America and that its FY2011 sales pipeline is fast approaching $1 billion.
Ellison also said that Oracle means to "dramatically grow the Sun salesforce and grow the business rapidly." Despite the layoffs in Europe and Asia, it is hiring.
Although Oracle means to hold on Sun's channel it will be going more direct.
Oracle also claimed to be beating the pants off SAP and taking share. According to its calculations, "over the last 12 months Oracle's applications business has grown 5% on a constant dollar basis 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."
President Chuck Philips said the company is attaching so-called client architects to account to act as effective CTOs and try to guide data center decisions.
Oracle realized an operating margin of 35%. GAAP operating cash flow on a trailing 12-month basis was $8.7 billion.
Catz said she was consciously conservative in guiding revenues up 44%-48% on a non-GAAP constant currency basis or 41%-45% at current exchange rates this quarter with a non-GAAP EPS of 36 cents-38 cents. She figures new software license revenues will be up 4%-14% in constant currency, 2%-12% at current exchange rates and that hardware revenues - sans support - will be about a billion dollars.
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