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Oracle Q2 Results Point to Upturn in 04

Oracle said growth in license revenues helped it bring in a profit of $617 million, for its second fiscal quarter, up 15 percent over the same time last year.

The results were helped in part by the weaker dollar, which has been a boost to other global technology players in exchange rates overseas.

But overall, however, the chief financial officer of the database giant said the business climate is turning around for the technology sector.

Earnings per share were 12 cents compared with 10 cents the same period last year. For the three months ended Nov. 30th revenues were $2.5 billion, up 8 percent.

As a result of the improving economy, company officials have eased up their earnings expectations for the next quarter, though from 11 cents per share to 12 cents per share, thanks in part to the size of new contracts that are in the pipeline.

Company officials told analysts that they are more encouraged about the improvement in the sector than they have been for a few years.

The Redwood Shores, Calif.-based maker of enterprise applications and infrastructure software said new software license sales -- often viewed as the main indicator of how a company is performing -- came in at $849 million, up 13 percent over the same time last year.

Software license updates and product support revenues were up 17 percent to $1.11 million.

All major software product categories and geographic regions posted growth, said Oracle CFO Jeff Henley. The fastest growing sector for Oracle's applications business is outsourcing, which increased 82 percent in the quarter.

Second quarter operating margin was 37 percent, while operating cash flow in the first half of the fiscal year totaled $1.6 billion.

Oracle CEO Larry Ellison said the company's total applications growth of 27 percent exceeded the growth rates of many of Oracle's competitors, including SAP, PeopleSoft, Lawson and Siebel, in their most recent quarters.

Ellison also made it a point to compare his company's fiscal performance with that of the combined PeopleSoft and J.D. Edwards entity with which Oracle has been trying to acquire in a hostile merger attempt since June 6.

"For example, new license sales at the combined PeopleSoft and JD Edwards company declined 18 percent as compared to their results when they were operating as separate companies," said Ellison.

The U.S. Department of Justice and European Commission are currently examining both sides of the Oracle/PeopleSoft deal to determine whether or not the deal is in the best of interest of customers. PeopleSoft said Oracle's proposal violates antitrust laws; Oracle alleged PeopleSoft is acting in bad faith by dropping in an unofficial poison pill in the form of a customer assurance program whose rules could tack on more than $800 million to the current Oracle bid of $7.3 billion.

Meanwhile, Oracle is pressing forward on its infrastructure software front, rolling out its grid computing-oriented application and database server strategy, 10g. The 10g application server was launched last Tuesday while the next-generation database server will be available before the new year.