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Grid Strategy Is Good For Oracle

While it tries to prove that the enterprise software market is more diverse than the feds think, Oracle announced profits had jumped by 15 percent to $990 million (19 cents per share).

The higher net income during its fourth quarter, which ended May 31st, was spurred in part by its grid strategy, and an overall improvement in tech spending, company officials said.

Revenue for the quarter was up 9 percent to $3.08 billion, compared to the same period a year ago. Software revenue was the usual king for the world's largest enterprise software company, coming in 12 percent higher to account for $2.5 billion of Oracle's total. The balance came from services revenue, which was down 4 percent to $558 million.

In a statement along with the release, Oracle officials called the Q4 operating margin of 46 percent an all-time high.

"Operating income was $1.4 billion in the fourth quarter and $3.9 billion for the full year," said Oracle chairman and CFO, Jeff Henley.

"That's the best operating profit we've ever delivered; even better than our best year during the Internet bubble. We had a very strong finish to a very good year."

Oracle CEO Larry Ellison chalked it up to the company's Grid computing strategy, which it launched six months ago. Since then, he said, database new license sales have been growing at a rate of 15 percent, he said.

"We're still early on in the adoption cycle but the Oracle 10g database is off to a fast start. The market is just beginning the move to databases and application servers running on grids of low-cost computers, and Oracle is leading the way."

Profit for the full year was up 16 percent to $2.7 billion (50 cents per share). Total revenue was up 7 percent to $10.2 billion for the year. Software revenue took in the lion's share: $8.1 billion, up 12 percent, while services slid by 8 percent overall to $2.1 billion. The operating margin for the year was 38 percent, also an all time record.

The release of its fourth quarter and full year earnings hit during the first week of Oracle's trial against the Department of Justice over whether the company can proceed with its $7.7 billion takeover bid for PeopleSoft.



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