Oracle software revenue shows signs of weakness

Oracle reported another strong financial quarter on Monday, posting $4.2 billion (£2.16bn) in revenue for the second quarter of fiscal 2007, results that beat analysts estimates by 1%.

Share

Oracle reported another strong financial quarter on Monday, posting $4.2 billion (£2.16bn) in revenue for the second quarter of fiscal 2007, results that beat analysts estimates by 1%.

However, there were signs in its software revenue results that the company's growth spurt on the strength of acquisitions of PeopleSoft and Siebel Systems could be coming to a halt.

The company's revenue in the same period of last year was $3.39bn. While Oracle's most recent quarterly revenue was slightly higher than the $4.15bn analysts polled by Thomson Financial expected the vendor to earn, earnings per share, which were $0.22, met their expectations. Net income was $1.17bn, a 20% growth over the $972 million reported in the same quarter of last year.

Analysts were keeping a keen eye on software license revenue during the quarter, and results show that their concern that Oracle's revenue surge is the result of acquisitions, and not strength in its own core software business, could be valid.

Oracle's software revenue, which was $3.21bn, grew 19% year on year, coming in on the low end of the company's growth expectations of 19 to 21%. Moreover, new software licence revenue for the quarter was $1.21bn, an increase of only 14% over the same period last year when the company had predicted an increase of 15 to 20%.

Software licence update and product support revenue came in stronger, at $2.01bn, an increase of 25% over the same period last year. Still, analysts likely will see Oracle's software licence revenue results as a sign of weakness for the vendor.

Find your next job with computerworld UK jobs