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Oracle's Profit Rockets 80% on Software Sales

March 15, 2000|From Bloomberg News

REDWOOD SHORES, Calif. — Oracle Corp., the world's biggest database software maker, on Tuesday said its fiscal third-quarter earnings rose 80% as software applications sales soared, sending its shares higher.

Profit from operations rose to $498 million, or 17 cents a share in the quarter ended Feb. 29, from profit from $277 million, or 9 cents a share, a year ago. That beat the 13-cent average estimate of analysts polled by First Call/Thomson Financial and matched "whisper" estimates of 17 cents. Revenue rose to $2.4 billion from $2.1 billion.

Oracle benefited as more companies bought so-called customer resource management software to connect their supply chain, inventory and other internal functions with customer orders. Those sales rose 179%.

"Coming out of Y2K, the lock-downs are coming off and companies are picking up their buying," said Gary Abbott, an analyst at Punk, Ziegel & Co.

Oracle also unveiled three alliances for online exchanges in the last four months, to link suppliers and buyers in the auto, retail and convenience store industries.

Software sales, or licenses, grew 30% from a year ago, but revenue from consulting services rose only 10%. Oracle said it was providing less consulting to customers, allowing independent consulting firms to pick up more of that business as Oracle focused on selling software.

"We've really been de-emphasizing consulting," said Oracle Chief Financial Officer Jeff Henley. "But we think that may be hitting the bottom, and I think it may turn around and grow this calendar year."

Oracle shares fell $1.75 to close at $77 on Nasdaq before earnings were announced. The shares rose to as high as $83.63 in electronic trading after the 1 p.m. PST close.

Oracle said it's on track to reduce expenses by $1 billion by June, a pledge that Chief Executive Larry Ellison made earlier this year. Expenses rose less than 1% from a year ago.

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