Oracle’s 2nd-Quarter Earnings Surge Past Expectations

Oracle Corp. said Tuesday its fiscal second-quarter earnings jumped 40%, beating even the most optimistic forecasts, as its business software sales soared.

The world’s No. 1 database software maker said net income rose to $384 million, or 26 cents a share, in the period ended Nov. 30, from $274.1 million, or 19 cents a share, a year ago.

That beat the 22-cent average estimate of analysts polled by First Call Corp. Estimates published on Internet investor sites, the so-called whisper numbers, were as high as 25 cents. Revenue grew 10% to $2.32 billion.

Oracle benefited from a surge in the number of companies seeking software to do business on the Internet, and was able to further reduce its costs, analysts said.

Oracle shares rose $7.63, or 10%, to $84.56 in trading on electronic networks after the 4 p.m. EST close, when earnings were reported. In regular trading on Nasdaq, Oracle closed down $2.88 at $76.94.

Oracle executives said they expect the company’s strong earnings to continue next year as more companies begin doing business on the Internet and turn to computer software to manage their inventories, supply chain and customer contacts.

“We think it’s still the early stages of e-business, and we think most customers still haven’t done anything,” Chief Financial Officer Jeff Henley said. “If we’re right, there should be a lot of take up on revenue next year.”

Analysts agreed, saying Oracle would also benefit from more companies buying software and upgrading their computer systems after Y2K.

Worries that the computer software glitch that could cause some computers to misread dates in 2000 as 1900 have caused some companies to delay purchases, analysts said.

Oracle’s pretax profit margin grew by 5.5 percentage points this quarter as the company continued its cost-cutting efforts.

Oracle Chief Executive Larry Ellison earlier this year pledged to reduce the company’s costs by $1 billion by next June. It has begun consolidating its internal computer systems and using its own sales information-management software.