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Oracle results up on software sales and support

Hardware declines in X-86 segment, but Oracle still sees 12% revenue growth

Oracle results up on software sales and support
Oracle is focused on its high-end hardware offerings and applications, says Ellison.

Oracle posted increased revenues and income for its fiscal first quarter 2012, despite declining hardware sales.

The company reported GAAP total revenue up 12% to $8.4 billion for the quarter ended 31st August, with GAAP operating income up 40% to $2.7 billion. Operating margin was up 40% to $2.7 billion.

Hardware systems dropped 5% to $1 billion, with particular weakness in the X-86 server business. In an analysts call, Oracle CEO Larry Ellison said that this commodity business was not a focus for Oracle, rather that engineered systems, hardware that has been designed to run Oracle applications, was the focus. Sales of Oracle's Exadata and Exalogic integrated appliances almost doubled from the same quarter one year ago, Ellison added.

"Our high-end server business - Exadata, Exalogic, and SPARC M-Series - delivered solid double digit revenue growth in Q1," said Mark Hurd, Oracle president. "In contrast, revenue declined in our low-end server business. By moving away from low-margin commodity hardware and focusing on high-end servers, we increased our hardware gross margins from 48% to 54%. Our strategy to grow the profitable parts of our hardware business is paying off."

Oracle's software business fared better, with new software license revenues up 17% to $1.5 billion, and software license updates and product support revenues also up 17% to $4 billion.

Safra Catz, Oracle president and CFO said: "New software license sales grew 17%. This strong organic growth coupled with disciplined business management enabled yet another increase in our operating margin in Q1. Operating cash flow increased this quarter to $5.4 billion, up $1.6 billion from $3.8 billion in Q1 of last year."

Ellison also revealed that it is about to launch the next generation of its SPARC microprocessor and a server, running Solaris 11 Unix, which will use the new processor.

"Next week Oracle will announce a new high-performance SPARC microprocessor, and a new high-end server called a SPARC SuperCluster," said Ellison. "The new SPARC T4 microprocessor is up to 5 times faster than the T3 microprocessor it replaces. The new SuperCluster is engineered to use the SPARC T4 microprocessor and the Exadata flash and disk storage system to deliver extreme record-breaking performance."

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