Oracle Corp, whose US$5.1 billion hostile bid for rival PeopleSoft Inc was rejected today, said fourth-quarter profit surged 31 percent as sales of new software licenses climbed for the first time in more than two years.
Net income rose to US$858.1 million, or US$0.16 a share, in the quarter ended May 31, from US$655.9 million, or US$0.12, a year earlier, Redwood City, California-based Oracle said in a release.
Sales rose 2.1 percent to US$2.83 billion. Without the benefit of a weak dollar, revenue would have fallen 4 percent, chief financial officer Jeff Henley said on a conference call with reporters.
Sales of new software licenses increased 1.2 percent, their first gain from a year earlier since the quarter that ended in February 2001. Investors said Oracle chief executive Larry Ellison is pursuing revenue through acquisitions because of limited growth prospects in his main business, database software to store and sort information.
"Everybody's been wishing and hoping that enterprise-software budgets would increase," said Larry Jones of NCM Capital Management Group, which oversees US$2.5 billion including 998,000 Oracle shares.
"Maybe this is a sign there's a modest upturn and things will stop going down," he said.
Oracle shares, which have climbed 23 percent this year, rose US$0.38 to US$13.71 in extended trading after the report. Earlier they gained US$0.06 to US$13.33 as of 4pm New York time in NASDAQ Stock Market trading.
Analysts had expected sales in the fourth quarter to decline 1 percent to US$2.75 billion, according to the average estimates in a Thomson Financial survey. The company reported US$2.77 billion in the year-earlier period.
Revenue benefited from the slumping dollar, which fell 8.3 percent against the euro in the period. That meant that revenue earned overseas in other currencies converted into more dollars.
Oracle got 51 percent of its sales in the quarter from outside the US, up from 46 percent a year earlier.
Revenue from technical support and license upgrades climbed 12 percent. Consulting and services revenue dropped 11 percent.
Sales of new database licenses increased 3.2 percent to US$933.5 million. Oracle's database programs, which compete with software made by International Business Machines Corp and Microsoft Corp, made up 79 percent of total new license sales.
Revenue from business applications for processing payroll, tracking inventory and automating customer service, a market in which Oracle competes with PeopleSoft, Germany's SAP AG and Siebel Systems Inc, was little changed at US$246.2 million.
"The numbers are still not fabulous versus what they were in the 1990s, but we feel like at least the trends are getting better and things are starting to turn around," Henley said on the call.
Oracle is the world's third-biggest software maker, behind Microsoft and IBM.
PeopleSoft's board today said Oracle's bid can't clear antitrust scrutiny, offers too little for shareholders and may cause uncertainty for customers.
PeopleSoft shares fell US$0.25 to US$17.37, or 8.6 percent above Oracle's US$16-a-share offer, indicating investors expect Oracle to raise its bid.
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