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Recurring Revenue: Article

Oracle Sales Surge 47%

Larry spits in HP’s eye again

Oracle's fiscal Q2 revenues were up 47% to $8.6 billion, ahead of expectations of $8.3 billion. Its performance was nothing like poor Cisco, suggesting that maybe the portents aren't as bad as the doom merchants say.

The all-important new software license revenues were up 21% to $2 billion.

Oracle co-president Safra Catz, who predicted only 6%-16% growth last quarter, credited "company-specific momentum" for the 21% uptick in new licenses.

Software license updates and product support revenues were up 12% to $3.6 billion.

Sun hardware and support revenues were worth $1.75 billion, roughly 20% of Oracle's total, with a gross margin on hardware of 53%.

Oracle co-president Mark Hurd said the pre-packaged hardware/software Exadata appliance pipeline is now worth nearly $2 billion.

He claimed the number "is a good leading indicator that customers are planning to increase their investment in Oracle technology." Guess he was thinking of the people who thought buying Sun was a dumb idea and that albatross couldn't be turned around.

Oracle is expecting "more meaningful" hardware growth next year. The Exadata box, soon to be followed by the Intel- and Solaris-based Exalogic machine, has been sold in 50 countries, Hurd said, with 30%-35% of its initially hesitant customers moving to their second box and others coming off pilots and starting to write checks.

During the Thursday conference call CEO Larry Ellison targeted HP, rather than IBM, as an easier mark. That's his second swing with that bat.

HP's machines, he said, are "slow, expensive and add little or no software value." Although both IBM and HP are ahead of Oracle in the high-end OLTP and data warehousing space, he predicted that Oracle would soon be number two. HP, he said, will "lose share next year."

Reportedly - and this comes from an HP source - 70% of Exadata sales are replacing HP machines, which kinda explains Oracle change in tact from anti-IBM to anti-HP, now doesn't it?

Larry thinks he's got so-called Big Data covered with what he's got in-house, which is fault-tolerant unlike IBM and HP.

He also drubbed SAP as a loser with new licenses down 14% over the last few quarters. The making of Oracle, he said, was its industry-specific apps, which SAP doesn't have, a vindication of a lot of Oracle's acquisitions in recent years. Oracle's Fusion software, its Java rewrite of acquired applications, is right around the corner promising to offer a single integrated suite in which all the pieces fit together.

Ellison claimed he's "just beginning to take share in apps."

Oracle earned $2.6 billion non-GAAP, up 34%, or 51 cents a share when Wall Street thought it would see 46 cents. Oracle itself said it would do 44 cents-46 cents. Non-GAAP operating income was up 33% to $3.8 billion, and its non-GAAP operating margin was 44% with Sun included.

Oracle's quarter ended November 30. It's still smiling from its $1.3 billion jury verdict in its soap opera-like copyright case against its great rival SAP. Its earnings in Q2 include a $120 million that SAP paid to cover its legal fees. SAP is resisting paying the rest.

Oracle says its Q3 should return non-GAAP ESP of 48 cents-50 cents on revenues up 30%-34% in constant currency.

Oracle shares are up 23% this year and are currently at a high.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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