Oracle's net income for the third quarter that ended on February 28 rose 78 percent to $2.1 billion (£1.3 billion) over the same period last year, helped by strong software sales and an improving hardware business, the company said Thursday. Revenue for the quarter jumped 37 percent to $8.8 billion (£5.5bn).
Revenue from new software licence sales, which provide a key insight into a vendor's growth and how customers are feeling about IT spending, rose 29 percent to $2.2 billion (£1.36bn) year over year. Software licence updates and product support revenues, which provide steady income even as new licence sales slow, rose 13 percent to $3.7 billion (£2.3bn).
Hardware systems sales were $1 billion, down slightly from the second quarter's total of $1.1 billion. No comparison to the same quarter last year could be made, as Oracle only completed its purchase of Sun Microsystems on January 27, 2010.
However, Oracle's "hardware product gross margins increased to 55 percent in the quarter so we are now completely confident that we will exceed the $1.5 billion profit goal we set for the overall Sun business for the current fiscal year," co-President Safra Catz. All geographic regions had revenue growth of 30 percent or more, with strong sales for the Exadata and Exalogic appliances, co-President Mark Hurd said.
Oracle also signed a number of large deals "with some of the biggest names in cloud computing," including Salesforce.com, CEO Larry Ellison said. "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," he added.
With the purchase of Sun Microsystems, Oracle has embarked on a strategy to sell customers on integrated systems spanning hardware and software, a la the IBM of old.
Oracle has been aggressively going after IBM as well as HP, with the latest salvo being its decision, announced this week, to stop developing software for Intel's Itanium chips. HP's Integrity servers are based on Itanium processors.
Oracle has been "reacting in a lot more confident way when it comes to pricing and proposals to clients," said Eliot Arlo Colon, president of Miro Consulting, a firm that helps companies negotiate licensing agreements with the vendor. "Clients who are waiting and holding out for a better deal are finding that next offer is no better, or a little worse."
Miro customers are buying hardware from Oracle, too. "Every client as part of the negotiation wants to have a hardware discussion," Colon said.
The company is seeing deals for Oracle's Exadata database machine "jump substantially," he added. "I don't know if anyone would have predicted it would take hold as quickly as it has," Colon added.
Miro knows of roughly 20 multimillion dollar Exadata deals that have closed in the past 10 to 12 weeks, both for its own clients and others, Colon said. The firm has even added specialised staff to deal with Exadata-related sales.