SAP is still gaining market share in North America, say one analyst, who nonetheless thinks 'everything at Oracle is going according to plan.'
Posted Jun 30, 2005
Oracle reported fourth-quarter revenue growth of 26 percent and has raised its earnings forecast for the current fiscal year, despite industry concern surrounding the company's integration of its PeopleSoft product line. Net income for the Q4, which ended May 31, 2005, rose 3 percent to $1.02 billion, or 20 cents a share, from $990 million, or 19 cents a share, last year, including acquisition expenses and other charges. Excluding those charges, earnings were 26 cents a share. Revenue rose to $3.88 billion from $3.08 billion.
During a conference call CEO Larry Ellison said Oracle is making gains against SAP AG, the largest maker of business-software applications, while also taking market share from BEA Systems. Oracle's flagship database software business, which owns 41 percent of the market share, again drove results. Sales of database programs grew 16 percent to $1.26 billion, according to the company. Oracle's smaller business-applications unit, which includes the PeopleSoft product lines, didn't fare as well. Oracle reported new license sales of $350 million, compared to $231 million in the same quarter last year. But in Q4, which is the first complete quarter that includes PeopleSoft's sales, Oracle's total was less than the combined license sales of $361 million for the two companies in the same quarter last year. For the current fiscal quarter, ending in August, Oracle said it expects total revenue to finish between $2.92 billion and $2.98 billion, up more than 32 percent from last year.
"Oracle's database business delivered another strong growth quarter," Ellison said. "This quarter marks an acceleration of more and more companies moving their database applications off mainframes and onto Oracle Grids." Ellison said Oracle is looking "very carefully at targeted acquisitions" to boost its annual earnings growth rate of 20 percent. He estimated Oracle's internal growth at about 15 percent and says the company is focusing on acquisitions in specific industry segments, similar to its purchase earlier this year of Retek, a provider of retailing software.
While Oracle's numbers are strong, it appears that SAP is continuing to gain market share against the company and the rest of the industry, according to Ian Jacobs, analyst for Current Analysis. "I think everything at Oracle is going according to plan," he says. "With all the mergers and acquisitions they've made the past year, that's clearly the road they're going down. That said, I don't think they necessarily gained market share on SAP. That company continues to build and expand its influence in the North American market."
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