Oracle's 4Q Earnings Up 76 Percent

Wednesday, June 21st 2000, 12:00 am
By: News On 6

SAN FRANCISCO (AP) — Oracle Corp., the self-proclaimed king of Internet business software, capped a regal year Tuesday by announcing fiscal fourth quarter results that handily beat expectations.

Excluding investment gains, the Redwood City-based company earned $926 million, or 31 cents per share, in the three-month period ended May 31. The profit represented a 76 percent increase from the comparable 1999 period.

Analysts polled by First Call/Thomson Financial anticipated earnings of 25 cents per share. The ``whisper number,'' representing the scuttlebutt of stock market insiders, was 26 cents per share.

Oracle co-founder and chief executive Larry Ellison was euphoric, predicting even bigger things in the upcoming year.

``The (business) pipelines are breathtaking,'' Ellison said during a conference call with analysts. ``It will come down to execution, but the opportunity is simply astounding.''

Industry analyst Bob Austrian, who has been following Oracle for 15 years, said he has never heard Ellison and his chief lieutenant sound more optimistic than they were Tuesday.

``They are optimistic for a reason,'' Austrian said. ``Oracle is showing us the way in e-business and leading by example.''

Including gains generated mostly from Oracle's sale of its 12 percent stake in a Japan affiliate, the company's fourth quarter net income totaled $4.9 billion, or $1.63 per share.

Revenues in the quarter increased 15 percent to $3.4 billion.

For the entire fiscal year, Oracle earned $2.1 billion or 69 cents per share, excluding the investment gains, a 61 percent improvement from the prior year. Full-year revenues rose 15 percent to $10.1 billion.

The report came out after the close of regular trading, which saw Oracle shares little changed at $86.047, up 4.7 cents. In after-hours trading at 6 p.m. EDT, the stock was down $2.609, or 3 percent, at $83.438.

Some investors may have been disappointed in the relatively slow growth of Oracle's core database business, said Austrian, of Banc of America Securities in San Francisco. The company's database sales in the quarter increased by 12 percent to $1.2 billion.

Oracle has been dazzling investors since Ellison pushed the company down a new path about a year ago.

Ellison, known for his flamboyance, pledged to slash Oracle's expenses by $1 billion annually by automating the company's administration while also boosting revenues by providing ``e-business'' solutions to other companies.

The metamorphosis exceeded even Ellison's wildest expectations. In the fourth quarter, Oracle's operating profit margin soared to 41.1 percent versus 27.4 percent a year ago.

Ellison, who has become the world's second richest man as Oracle's stock enjoyed a fivefold increase over the past year, is aiming to lower the company's costs by another $1 billion during the next year.

Oracle also is trying to become a one-stop shop for Internet-related software. The strategy is pitting Oracle against a wide array of formidable software companies, including Germany's SAP and Pleasanton's Commerce One.

In Tuesday's announcement, Ellison claimed that Oracle had surpassed SAP as the industry leader in business application software with $447 million in fourth quarter sales versus $352 million at SAP.

At a conference in Las Vegas, SAP executives promised to reassert its position and predicted that Oracle would get its comeuppance in the upcoming year.