Oracle Bullish Despite Downturn

EnterpriseFinancial Markets

Oracle announced that its third-quarter fiscal 2009 earnings per share were up 3 percent over the same quarter last year

Oracle chief executive Larry Ellison feels that his company is making broad-based gains against its competitors, even as the global recession weighs down the IT industry.

Analysts and industry insiders have noted that Oracle’s recent moves, including the purchase of SMB server virtualisation specialist Virtual Iron Software announced on 10 March, indicate the company is strong enough to continue its heavy acquisition schedule. Ellison seems publicly confident in every aspect of Oracle’s operations.

“We’re competing more effectively across the board in all our product areas,” Ellison said in an analyst call.

Oracle announced on 18 March that its earnings per share for third-quarter fiscal 2009 were up 3 percent versus the same quarter last year, to 26 cents.

Overall, total revenues were up 2 percent to $5.5 billion (£3.8bn), with quarterly net income down nearly 1 percent to $1.3 billion.

In addition, Oracle announced a quarterly cash dividend of 5 cents per share on its common stock, to be paid to shareholders of record as of 8 April. It is the first-ever dividend instituted by the company.

Despite a global recession weighing down on IT companies, Oracle has been continuing to release new products and purchase smaller organisations.

On 9 March, Oracle announced the release of Oracle Sourcing On Demand, a SAAS solution designed to make supply-chain management more cost-effective and efficient.

Oracle has also continued its traditional pattern of acquisitions. On top of its 4 Feb purchase of mValent, a company offering configuration management solutions, the company acquired more than 11 companies in 2008.

Oracle’s “acquisition strategy is paying off,” Ray Wang, an analyst with Forrester, said in an interview. By targeting large recurring-revenue streams in systems maintenance, and reinvesting $3 billion (£2.1bn) back into products, Oracle “has kept customers from fearing a slash-and-burn approach.”

“This is a viable model that Oracle has applied from other vendors such as Infor and Epicor,” Wang added.

Oracle’s focus on enterprise data centers and IT may also have helped prevent its margins and revenues from eroding.

“Enterprise segments tend to be fairly steady with regard to their purchasing,” Roger Kay, an analyst with Endpoint Technologies Associates, said in an interview. “They might modify things here and there, but they largely do what they expected to do.”