Oracle Profit Rises 15% in 2nd Quarter

Oracle Corp. on Monday reported higher-than-expected fiscal second-quarter earnings, buoyed by strong sales of its core database software.

Executives at the Redwood City, Calif.-based company credited most of the growth to rising optimism among corporate technology buyers, who are beginning to ramp up spending after three years of cutting back.

Sales in the quarter ended Nov. 30 were $2.5 billion, up 8% from a year earlier. Net income rose 15% to $617 million, or 12 cents a share, compared with $535 million, or 10 cents. Oracle’s sales of database software increased 11%, the strongest showing in more than year.

Analysts’ mean earnings estimate was 11 cents a share.

“We’re more encouraged right now than we’ve been for several years,” Oracle Chief Financial Officer Jeff Henley said during a conference call.

Oracle shares slipped 13 cents to $12.70 in Nasdaq trading before the earnings release, then rose as high as $13.13 after hours.

Some analysts suggested that Oracle’s performance could bolster its quest to buy rival PeopleSoft Inc. Oracle launched a hostile bid for Pleasanton, Calif.-based PeopleSoft in June.

While U.S. and European regulators are mulling over the antitrust implications of a possible merger, Oracle is readying a slate of nominees for PeopleSoft’s board. Anything that makes Oracle look stronger than PeopleSoft could win it more shareholder votes.

“If Oracle has a good applications business independently, it gives them a little more bargaining power,” said Wells Fargo Securities analyst Eric Upin, who doesn’t own shares in either firm. And if Oracle wants to increase its tender offer, “a higher stock price gives them more flexibility,” he added.

Oracle slowed its share repurchases in the latest quarter, helping to increase the company’s cash war chest. US Bancorp Piper Jaffray analyst Tad Piper said the move suggested that Oracle was willing to pay more for PeopleSoft or was planning to make other acquisitions.

Oracle Chief Executive Larry Ellison on Monday stressed the performance of his company compared with that of his quarry, pointing out that new license sales at PeopleSoft and its recently acquired J.D. Edwards & Co. fell 18% in the most recent quarter from their levels a year ago, when the two firms were separate.

But PeopleSoft spokesman Steve Swasey said although the 18% figure was factually accurate, it was highly misleading, because the most recent quarter includes only one month of results from J.D. Edwards.

Oracle’s results got an 8% boost from currency fluctuations, and the company’s forecast for the third quarter, including a 7% to 10% revenue increase, was close to what analysts had been projecting.

Oracle forecast gains in Europe and Asia, but Henley said the spending rebound in North America would be stronger for the immediate future.