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Oracle 2Q earnings rise 18 pct to top Street view

Published on NewsOK Modified: December 18, 2012 at 5:57 pm •  Published: December 18, 2012

The flow of new licenses and subscriptions, which represent about a quarter of Oracle's revenue, is closely tracked by investors because they spawn more revenue in the future from upgrades.

In the current quarter, which ends in February, Oracle expects software licenses and subscriptions to increase in the range of 3 percent to 13 percent from the previous year. The company, based in Redwood Shores, Calif., predicted its adjusted earnings in the current quarter will range from 64 cents to 68 cents per share on revenue ranging from $9.1 billion to $9.5 billion. That would be a 1 percent to 5 percent increase from the prior year.

Analysts are forecasting adjusted net income of 66 cents a share on revenue of $9.44 billion.

Oracle's stock added 52 cents to $33.40 in extended trading after the numbers came out. If that gain holds in Wednesday's regular trading session, it will mark a new 52-week high for the stock.

The specter of higher taxes prompted Oracle to make the unusual decision to bunch the next three quarters of stock dividends into a single payment that will be made before the end of the year. The move, announced earlier this month, is designed to ensure that Oracle CEO Larry Ellison, who owns a 23.5 percent stake in the company, and his fellow shareholders don't get hit with a higher tax bill on dividend income next year. The accelerated payment schedule will distribute about $206 million to Ellison, already one of the world's richest people, and will lower his tax bill by tens of millions, if the rates on dividend income rise next year.

Oracle would have fared even better if it could find a way to sell more computer servers and other hardware, something it has been unsuccessfully trying to do since completing its $7.3 billion acquisition of Sun Microsystems Inc. in 2010. The company's hardware revenue plunged 16 percent from last year.

In Tuesday's conference call, Ellison said some of the erosion in the hardware division has been by design as Oracle weeds out some of the less-profitable equipment. He assured analysts that hardware revenue will start increasing in the final quarter of Oracle's fiscal year — the period spanning from March through May. Sun's Java programming language already has been paying off for the software side of Oracle's business, according to Ellison.

"Sun has already proven to be the most strategic and profitable acquisition Oracle has ever made," he said.