Oracle exceeded estimates for quarterly profit for the third quarter. Oracle’s profit, excluding certain one-time costs, increased to $0.62 per share. The average estimate of analysts surveyed by Bloomberg News was $0.56.
Oracle also exceeded estimates for new license sales. New software license sales increased 7%, to $2.37 billion, in the fiscal third quarter. Analysts had predicted 3% growth. Joel Levington, a managing director at Brookfield Investment Management in New York, said in an e-mail, “I view this as a high-quality beat, and it certainly should be viewed as a positive catalyst” for Oracle shares.” He went on to state, “The license number was about $100 million better than we expected.”
Oracle’s net income rose 18% to $2.5 billion, or $0.49 cents a share, from the same quarter a year earlier. Overall revenue increased 3%, to $9 billion. Profits for the current quarter, ending in May, may exceed analysts’ estimates of $0.76 per share, as Oracle predicted that its profit would be $0.76 to $0.81 in the fourth quarter, excluding one-time items.
Hardware sales decreased more than analysts had expected. Hardware systems sales declined 16%, to $869 million, while analysts were projecting an 11% drop. Oracle made the decision to sacrifice volume for higher-margin products and placed a large emphasis on the sales of large systems for data processing at the expense of less expensive gear.
Oracle is the biggest maker of database software in the world. Oracle’s database software is used by a wide variety of companies to store information and process customer transactions. Oracle is also the second-largest maker of business applications used to manage financials, operations and human resources, after SAP.
Oracle’s results are considered to be a sign of rising demand for programs designed to help companies organize data and run operations. Raimo Lenschow, an analyst at Barclays, believes that reorganizing the sales force, closing delayed deals, and taking advantage of improvements in the economy helped Oracle overcome the disappointing results in its fiscal second quarter reporting.