Oracle new licence decline takes edge of profit rise

Oracle has posted a 28 per cent jump in its third-quarter profits, but there are warning signs of trouble ahead with a decline in revenue for new software licences.

Oracle reported net income of $440 million on sales of $2.07 billion in the quarter ended 31 August compared with $343 million on revenue of $2.03 billion in the same period last year.

The company reported $1.03 billion in revenue from software licence updates and product support, up 14 per cent from the same period the previous year. But it also posted revenue of $525 million from new software licences, compared to $563 million in the same period last year, well below the company's sales projection of $574 million to $631 million.

In addition, much of the net income gain reflected the accounting for Oracle's investment in Liberate Technologies, which sells software to the cable television industry. Oracle sold its stake in Liberate in June. Income from operations was $616 million for the quarter, up just 6.2 per cent from a year ago.

“I think clearly we stumbled,'' said Jeff Henley, Oracle's chief financial officer. “I think we had a number of deals slip, and we just sort of ran out of runway because we didn't focus on them well enough early enough.''

Database sales fared worse than applications in the quarter. New database license revenue fell 7 per cent from a year ago to $408 million. Revenue from new applications licences fell 3.6 per cent to $107 million.

Oracle attributed the disappointment to unexpectedly slow sales in August and the disruptions from reorganising its North American sales force. North American new-licence revenue was down 19 per cent from a year ago. But Henley added: “I think we're seeing a lot of activity, a lot of new interest, more new customers we're talking to than the last couple of years.”

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