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Oracle Tops Estimates, Execs Come Out Swinging

Oracle earnings

Oracle (NASDAQ: ORCL) topped Wall Street expectations for its fourth quarter, shrugging off the persistent economic malaise gripping the IT industry to post impressive numbers.

The company reported earnings after charges of $1.9 billion, or $0.38 per share, a drop of 7 percent from last year. Earnings before charges declined only 1 percent to $0.46 per share, beating analysts' estimates of $0.44 per share, according to Reuters Estimates.

Quarterly revenues dropped 5 percent to $6.9 billion, although Oracle said that figure includes some good news: an 8 percent increase in software license updates and product support revenues -- a key metric for the company.

Full-year fiscal 2009 earnings rose 1 percent to $5.6 billion, or $1.09 per share after charges. Revenue totaled $23.3 billion, a 4 percent increase from a year earlier.

Oracle said its strong figures came in spite of the strength of the U.S. dollar and the slowdown in IT spending.

"Adjusted for the substantial movement in the U.S. dollar exchange rate this fiscal year, which is beyond our control, we grew non-GAAP [Generally Accepted Accounting Principles] earnings per share by 19 percent for the year," Oracle President Safra Catz said in a statement. "That's an amazing achievement given what's been happening in the global economy over the past twelve months."

She said that the company is forecasting first-quarter earnings of $0.29 to $0.31 per share before charges at current exchange rates, and earnings of $0.21 to $0.22 per share after charges at current exchange rates.

The company said that ignoring the effect of the reduced value of foreign currencies, Oracle's fourth quarter would have seen a 9 percent increase in earnings over least year -- $0.42 per share.

"We achieved the highest Q4 operating margin in our history," Catz said, pointing to non-GAAP operating margins of 51 percent.

During Oracle's earnings conference call today, she added that the high operating margin is due to Oracle's large installed base and not due to trimming expenses.

"We continue to invest aggressively," Catz said. "We're up to $3 billion in R&D alone, outshining our competitors. We are not a cost-cutting story; we are a profitability story. As our install base grows, our margins will grow, although the Sun acquisition will change the margin story for a time."

Oracle claims victories

The company also came out swinging against enterprise software competitor -- and sometime lawsuit opponent -- SAP.

"We grew faster and took market share from SAP in every region around the world," Oracle President Charles Phillips said in a statement. "In Europe, our applications business grew 5 percent in constant currency versus negative 27 percent growth for SAP in their most recent quarter. Historically, Europe has been an SAP stronghold, but these results prove that we can compete and beat them everywhere."

The company also challenged database competitor Teradata.

"The Exadata Database Machine is well on its way to being the most successful new product launch in Oracle's 30-year history," Oracle CEO Larry Ellison said in a statement. "Several of Teradata's largest customers are performance-testing -- then buying -- Oracle Exadata Database Machines."

Ellison added during the call that Exadata is also winning customers from IBM's DB2 and Netezza, which he characterized as tied behind Teradata in market share.

Page 2: Shots at IBM and Salesforce, and completing the stack with Sun