FRAMINGHAM (03/15/2000) - Database giant Oracle Corp. yesterday reported an 80 percent increase in profits for its third quarter. The Redwood Shores, Calif.-based software company reported net income of $498 million, or 17 cents per share, for the quarter ending Feb. 29, up from $277 million, or 9 cents per share, during the same period last year.
Oracle executives attributed the results to cost-saving efforts the company initiated nine months ago, which dramatically reduced operating costs, and to overall increases in sales across the company's product lines. Both efforts, company executives said, owe their success to the Internet.
"As the Internet becomes more and more popular, (e-commerce customers) buy our database automatically," Oracle CEO Larry Ellison said during a teleconference with analysts and reporters. "All 10 of the world's biggest Web sites use Oracle, as do 93 percent of the public dot-com companies. The faster the Internet grows, the faster we grow."
"Nine months ago, we set out to save $1 billion annually by using our own Internet e-business applications," said Oracle Chief Financial Officer Jeff Henley. "That billion-dollar savings translates to a 10-point improvement in our margin."
Oracle database system sales rose 32 percent to $778 million, while application sales rose 35 percent to $199 million. Sales of customer relationship management software increased 179 percent, according to the company's report.
Oracle's consulting, education and support revenue together grew 10 percent to $1.4 billion. Overall revenues rose 18 percent to $2.45 billion from $2.08 billion.
Oracle's results beat average predictions of 13 cents per share, according to equity analyst Randal Chin at Deutsche Banc Alex. Brown Inc. in San Francisco.
Chin added that the highest estimate he saw for Oracle had been 15 cents per share.
The $498 million net-income figure doesn't include gains from Oracle's sale of its stake in TV set-top Internet content company Liberate Technologies in San Carlos, Calif. If that transaction had been included, Oracle's net income for the quarter would have been $763 million, or 25 cents per share, according to Henley.
Ellison said that stronger reliance on standard sales-contract terms and conditions resulted in greater margins. "Screwball sales deals disappeared," he said, and were replaced by value-based pricing and more efficient installations requiring smaller staffs and fewer programmer hours.
Oracle also announced involvement in three Internet e-commerce exchanges, with the largest players the retail, distribution and automotive industries.
Oracle stock was up $5.22 per share in mid-morning trading today, to $82.22.