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Wall Street Beat: Software vendor results offer glimpses of optimism

Marc Ferranti | Sept. 23, 2013
Oracle and Tibco report quarterly financial results that were mixed, but more solid than last quarter.

Enterprise tech companies including Oracle this week started reporting financial results that cover at least part of the third calendar quarter, and so far, the trends look mildly promising compared to last quarter.

For its fiscal quarter ending Aug. 31, Oracle reported revenue of US$8.4 billion, up 2 percent year over year, and net income of $2.2 billion, up 8 percent. Sales of new software licenses and "engineered systems," preconfigured hardware and software bundles like the company's Exadata offering, helped boost results.

One big question for Oracle is whether its cloud-based software will compete successfully against similar offerings from younger rivals such as Workday and Salesforce.com. Another issue is whether Oracle's move into hardware, essentially a bet it made when it bought Sun Microsystems in 2010, will pan out or continue to be a drag on profit.

Overall hardware system revenue decreased 7 percent to $1.23 billion in the quarter, Oracle said. However, engineered systems did well, officials said.

"Engineered systems had its best ever Q1 in terms of unit sales, growing over 60 percent compared with the same quarter last year," said Oracle President Mark Hurd in a press release.

In addition, new software licenses and cloud software subscription revenue was up 5 percent to $1.7 billion.

On the sales side, the company's report was marginally better than the prior two quarters, when revenue was flat year over year.

But on a conference call after the results were announced, Oracle Co-President Safra Catz cautioned that the current quarter would present a "tough" comparison to last year. New software license and cloud-subscription sales will range from a drop of 4 percent to an increase of 6 percent in constant currency, while overall revenue growth would range from 1 percent to 4 percent taking into account currency fluctuations, according to Catz.

CEO Larry Ellison is expected to discuss the company's latest database release, 12c, and upcoming enhancements for in-memory computing in the opening keynote at OracleWorld Sunday.

Oracle shares rose $0.02 Thursday, closing at $33.89, and rose again by $0.16 to close at $34.05 Friday.

Middleware vendor Tibco, meanwhile, reported an uptick in quarterly sales Thursday, after running into headwinds over the last few quarter as the company revamped its sales force to better execute sales strategy in the face of tough competition and a turbulent economy.

Total revenue for the company's third quarter of fiscal 2013 was $270.9 million, compared to $255 million a year earlier and net income was $21.3 million, compared to $26.1 million.

Last quarter, both sales and profit declined year over year.

Despite the tough economic climate over the past year, Tibco CEO Vivek Ranadivé has always maintained that the company can increase revenue and beat the competition, including giants like IBM, as long as its sales force executes on strategy.

 

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