Oracle Revenues Climb Despite Sun Hardware Drag

Oracle Corp. (NASDAQ:ORCL) reported revenue growth of 37 percent to
$8.8 billion in its third fiscal quarter, driven by software license
revenues, which grew by 29 percent to $2.2 billion.

And while some of the company’s newer hardware products showed
strong growth, a sluggish overall hardware business was believed to be
dogged by Sun’s legacy hardware products.

"The only blemish on the quarter was hardware systems products
revenues, which we believe was likely weighed down by Sun’s legacy
business, as engineered systems’ (Exadata, Exalogic) sequential revenue
growth of over 50 percent was strong and in line with our bullish
expectations," noted analyst firm FBR Capital Markets in a report
following Oracle’s earnings announcement.

Some observers have speculated that the struggles of the Sun
hardware business is behind Oracle’s announcement March 21 that it
would cease supporting servers based on Intel’s (NASDAQ:INTC) Itanium
high-end server platform which competes with Oracle/Sun’s SPARC
systems. The announcement set off a firestorm of words among Oracle, HP and Intel. (NYSE:HPQ)

For its part, Unix competitor IBM (NYSE:IBM) noted that in the Unix
space, market research firm IDC said that IBM’s Power systems had 53.9
percent share of the by revenue in Q4 2010, gaining 5.9 points of share
over competitors and leading the second-place vendor in the quarter by
more than 30 percent.

According to IBM, nearly 400 customers migrated from competitive
systems to IBM Power Systems in the fourth quarter, including 235 from
Oracle/Sun and 135 from HP. There were nearly 1,200 competitive
displacements to IBM Power Systems from Oracle/Sun, HP and others
throughout 2010.

Oracle reported net income growth of 78 percent in its third quarter
to $2.1 billion with earnings per share at 41 cents, up 75 percent year
over year.

Oracle President Safra Catz said the company is "completely
confident that we will exceed the $1.5 billion profit goal we set for
the overall Sun business for the current fiscal year."

Oracle President Mark Hurd noted that revenue from Exadata and Exalogic products grew sequentially by more than 50 percent.

And Oracle’s CEO noted that Oracle products underlie one of the most
successful SAAS (software-as-a-service) implementations around today.

“In Q3 we signed several large hardware and software deals with some
of the biggest names in cloud computing,” said Oracle CEO Larry Ellison
in a statement. “For example, Salesforce.com’s new multi-year contract
enables them to continue building virtually all of their cloud services
on top of the Oracle database and Oracle middleware. Oracle is the
technology that powers the cloud.”