Tags: Oracle | computer | software

Oracle: A Dominant Software Player

By    |   Friday, 29 Apr 2011 01:53 PM

As technology spreads and the need to store and manipulate data grows larger and larger, demand for software continues to rise. Indeed, this surge in demand is creating a data-center revolution.

That’s good news for Oracle (ORCL), the largest supplier of database software, the core of every information system. Possibly, it’s also good for Oracle stockholders.

Companies use database software to store their most important information. Oracle provides the enterprise software that includes applications to help businesses support and organize all their activities. The new trend toward “cloud” computing, which provides computer services over the Internet, offers more opportunities.

Oracle has boosted its dominant position through mergers, buying dozens of enterprise-software companies since 2005 for more than $35 billion, including BEA, PeopleSoft, and Siebel. Last year it expanded into hardware with the $7.4 billion purchase of Sun Microsystems.

Oracle reported net income of $2.12 billion in the quarter ended Feb. 28, up 78 percent from $1.19 billion a year earlier. Sales jumped 37 percent to $8.76 billion.

The future looks bright. Oracle is projecting that profits, excluding acquisitions and other expenses, will total 69 cents to 73 cents a share this quarter. That compares to 54 cents in the Feb. 28 quarter, which beat analysts’ average forecast of 50 cents.

Oracle also projects an increase in new software sales of between 4 percent and 14 percent in the coming quarter. It raised its dividend by 20 percent in March.

The purchase of Sun has worked out well, making Oracle a go-to source for both hardware and software. Some analysts had said the deal would hurt Oracle, because hardware is less profitable than software.

But the company reported that its hardware division’s gross profit margin climbed to 55 percent last quarter, from 53 percent in the prior quarter, and predicted it will rise more going forward.

UBS analysts raised their target price for Oracle shares to $39 from $36 after the earnings report.

Analysts said were impressed with Oracle’s rising growth in licensing and don’t anticipate a significant impact from Japan’s natural disasters.

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As technology spreads and the need to store and manipulate data grows larger and larger, demand for software continues to rise. Indeed, this surge in demand is creating a data-center revolution. That s good news for Oracle (ORCL), the largest supplier of database software,...
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Friday, 29 Apr 2011 01:53 PM
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