Sat, Dec 18, 2010 - Page 10 News List

Oracle profits set to beat Wall Street forecasts as software sales take off

Reuters, BOSTON

Oracle Corp forecast that its profit in the current quarter will beat Wall Street estimates, suggesting that its strategy of offering a one-stop shop for software and hardware is paying off.

Shares in the company run by Silicon Valley billionaire Larry Ellison rose almost 4 percent after it also reported new software sales surged past its own forecasts.

“It’s a nice present for shareholders,” a JP Morgan analyst told Oracle executives during an earnings conference call.

Oracle, which has spent more than US$42 billion on acquisitions over the past six years including its January purchase of hardware maker Sun Microsystems, has seen sales grow faster than those of rivals as it cross-sells its database, middleware, business management software and hardware to the same set of customers.

Avian Securities analyst Jeff Gaggin said that strategy has helped Oracle win business away from rivals including Hewlett-Packard Co, International Business Machines Corp and SAP AG.

“I’m not convinced that this necessarily means the IT spending environment is robust, but it certainly suggests that Oracle’s strategy is paying off,” Gaggin said.

Oracle said sales of new software climbed 21 percent from a year earlier to US$2 billion during its fiscal second quarter which ended on Nov. 30.

Three months ago, the company forecast that sales would rise between 6 percent and 16 percent.

Oracle forecast that it will report profit, excluding items, of 48 cents to 50 cents per share in its current quarter. That’s above the average analyst forecast of 46 cents, according to Thomson Reuters I/B/E/S.

Revenue climbed 48 percent from a year earlier to US$8.58 billion, buoyed by sales from the acquisition of Sun. That handily beat the average analyst forecast of US$8.34 billion.

It posted hardware sales of US$1.08 billion, slightly below the US$1.1 billion mosts analysts were expecting.

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