Oracle Earnings, Revenue Beat Forecasts; Shares Jump

Oraclereported a profit that jumped 38 percent excluding one-time items and easily outpaced analysts' estimates, helped by strong sales of new business software and faster-than-expected growth of its new hardware business.

The Oracle logo is displayed on the company's world headquarters in Redwood Shores, California.
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The Oracle logo is displayed on the company's world headquarters in Redwood Shores, California.

The maker of database software and other business technology said it earned 42 cents a share on a non-GAAP in its fiscal first quarter, compared with 30 cents a share during the same period last year.

Revenue for the most recent quarter to $7.59 billion, against $5.06 billion a year ago.

Analyst who follow Oracle expected the company to report a profit of 37 cents a share on a topline of $7.27 billion.

"We executed better than expected on both the top and bottom line for the quarter," said Oracle CFO Jeff Epstein in a prepared statement.

Including one-time items, earnings per share rose 20 percent over last year, to 27 cents.

New software sales—which generate long-term maintenance contracts, signaling future profitability—were up 25 percent to $1.3 billion. The company had forecast three months ago they would rise between 2 percent and 12 percent.

"It looks like they had a good first quarter. Strong revenue this year in maintenance means strong revenue in the future for maintenance—you're paying to get an upgrade in the future. It's a zero-cost line item," said Kim Caughey, senior analyst at Fort Pitt Capital Group. "The overperformance on revenue isn't due to currency—always reassuring."

Shares of the world's No. 3 software maker, which sells business software, database systems and now server hardware through its recent purchase of Sun Microsystems, popped more than 4 percent higher in extended trading Thursday. Get After-Hour Quotes for Oracle here.

The stock, a component of the Dow Jones Industrial Average, was at $25.36 at the day's closing bell.

Mark Hurd Melodrama

Oracle's results, reported Thursday, came as the company finds itself in a starring role in Silicon Valley's latest soap opera, this one involving Mark Hurd, the ousted chief of Hewlett-Packard. Oracle has scooped Hurd up to help sharpen its attack on its longtime partner HP.

Hewlett Packard
Hewlett Packard

Hurd's hiring keys up the drama between Oracle and HP at a time when Oracle is muscling into HP's turf by selling computer servers. That's a business Oracle picked up with the $7.3 billion acquisition earlier this year of Sun, a struggling server maker and fallen idol of the tech world.

The theatrics over Hurd's appointment as an Oracle co-president—a move HP has sued to stop—have overshadowed the fact that Oracle's core business is thriving because businesses have pumped up their investments in the programs that run their back offices.

Oracle is a bellwether because its software is ubiquitous but largely hidden from the public's view. It's used to keep bank transactions humming, airplanes landing on time and retailers' shelves stocked with the right amount of merchandise, for example.