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Oracle's earnings top forecasts
Business software maker posts higher fiscal 2Q profit on demand for database products.
December 13, 2004: 7:11 AM EST

NEW YORK (CNN/Money) - Oracle Corp., posted a gain in fiscal second-quarter earnings Monday that beat Wall Street forecasts.

The report was released three days earlier than originally scheduled because the company also announced it had finally reached an agreement to buy rival PeopleSoft (Research). In a separate announcement Oracle said it would spend $10.3 billion, or $26.50 a share, to buy PeopleSoft, ending its 18-month hostile takeover battle.

Redwood Shores, Calif.-based Oracle (Research) reported fiscal second-quarter net income of $815 million, or 16 cents per share, up from $617 million, or 12 cents a share, a year earlier. The results topped the 14-cent-a-share consensus estimate of analysts surveyed by First Call.

The company said that during the last 12 months it met its publicly stated goal of 40 percent operating margins for the very first time. Expenses rose only 3 percent in the period, and were unchanged except for the changes in currency exchange rates.

Revenue was up 10 percent to nearly $2.8 billion in the quarter, topping First Call's forecast of $2.6 billion. The company was helped by changes in the exchange rate, which increased the value of sales to overseas customers. In local currencies, the company saw only a 6 percent increase.

The company said new software license sales were up 14 percent to $971 million, which is better than some analysts' expectations for that segment. In the first quarter, new license sales gained only 7 percent to $563 million.

Oracle CEO Larry Ellison said in a separate statement that the highlight of the report was the 57 percent increase in new applications sales, a gain he said the company will be able to build upon with its long-sought agreement to buy PeopleSoft.

Revenue from software license updates and product support gained 12 percent to $1.3 billion, while revenue from services edged up only 1 percent to $533 million, and would have fallen 3 percent without the benefit of changes in currency exchange rates.

Still, that was better than first quarter results in services, which saw revenue down 7 percent overall and 10 percent when measured in local currency.  Top of page

-- Reuters contributed to this story.



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