Update: Oracle earnings jump 15% in Q2

IDG News Service - Oracle on Thursday reported second-quarter earnings of 29 cents per share, a rise of 15% over the same period last year. Total revenues rose 4% to $5.9 billion and net income jumped 12% to $1.5 billion.

New software license revenues, a key indicator of growth and stability, were up 2% to $1.7 billion.

Excluding special charges, earnings per share rose 15% to 39 cents on revenues of $5.9 billion, beating estimates from analysts polled by Thomson Reuters, who had on average predicted earnings of 36 cents per share on revenues of $5.7 billion.

The company also expects European regulators "to unconditionally clear" its acquisition of Sun Microsystems in January, Oracle President Safra Catz said in a statement. The deal has been on hold while the European Union conducts an antitrust review.

Sun will quickly improve its market share and financial performance once the merger closes, Oracle CEO Larry Ellison said in another statement.

Oracle's performance in the quarter was broad-based and not dependent on large deals, Catz said during a conference call Thursday.

The economy generally seems to be getting better, she added.

"We're definitely seeing customers back buying. It's extremely widespread ... We really are seeing a recovery," she said.

One Oracle product in particular, its emerging Exadata line of data warehousing appliances, will make a major impact in the future, according to co-President Charles Phillips.

"Exadata is on fire," he said. Oracle's stockpile of sales leads is growing week to week, and some customers are asking for multiple systems, Phillips said. "The main problem we have now is production capacity."

Exadata "is going to be huge," generating billions of dollars from system sales alone, not to mention annual maintenance fees, Ellison added. "How long it takes to get there remains to be seen," he said.

High-end products such as Exadata reflect Oracle's overall hardware strategy following the Sun deal's close.

Sun probably will never have the ability to compete in the high-volume, low-margin server business, Ellison said. "Dell and HP are good at it; we're going to avoid it."

Oracle also intends to build and sell complete systems for private cloud computing platforms, combining Sun hardware and storage with Oracle's virtualization and middleware products, he said.

Ellison also touched upon Oracle's upcoming and long-awaited Fusion Applications. Oracle has designed Fusion Applications as components, meaning customers using other Oracle product lines or even ones from rivals such as SAP can buy them a piece at a time, he said. "It's not a rip-and-replace sales strategy."

Oracle needs to move slowly with Fusion, however, given that many of its customers remain on older Oracle ERP (enterprise resource planning) platforms such as JD Edwards and PeopleSoft, which the company gained via acquisition.

The first Fusion Applications are expected to be released in 2010, but Oracle has provided no more specific date than that.