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Financial News Details

Oracle Corporation Reports Second Quarter Fiscal 1998 Results

December 8, 1997

REDWOOD SHORES, Calif., Dec. 8 /PRNewswire/ -- Oracle Corporation (Nasdaq: ORCL) today reported results for the quarter ended November 30, 1997. Revenues increased 23 percent (29 percent in local currencies) to $1,614 million from $1,311 million in the same period last year. Net income for the period was $187 million, or $0.19 per share, compared to net income of $179 million, or $0.18 per share, in the second quarter of fiscal 1997.

For the first six months of fiscal 1998, revenues increased 26 percent to $2,983 million from $2,364 million in the same period last year. Net income for the six-month period was $337 million, or $0.33 per share, compared to net income of $292 million, or $0.29 per share, excluding one-time charges associated with Navio and TSC acquisitions in the first fiscal quarter. Giving effect to the charges, net income for the six-month period was $196 million, or $0.19 per share. All of the share and per-share amounts in this release have been adjusted to reflect the 3-for-2 stock split effective August 15, 1997.

"Clearly, we were disappointed with the results this quarter," said Jeffrey O. Henley, executive vice president and chief financial officer. "While several factors impacted the quarterly license growth, the economic situation in Asia-Pacific clearly had a significant impact. In addition, the strength of the dollar continued to have a dramatic effect on our reported results this quarter. Without the impact of currency exchange, overall revenue growth would have been 29 percent. In Asia Pacific, which experienced a 14 percentage point negative currency exchange rate impact, revenue would have grown 15 percent in local currencies (1 percent reported in US dollars). EMEA had the second greatest negative impact from currency, reporting revenue growth of 35 percent in local currencies (24 percent reported in US dollars). Americas reported revenue growth of 30 percent in local currencies (29 percent reported in US dollars), versus the same period last year."

"During the first half of the fiscal year, Oracle established industry vertical organizations to deliver total solutions to key industries and we implemented several new product specialist organizations to achieve better alignment with our product divisions," said Ray Lane, Oracle's president and chief operating officer. "While the vertical organizations are delivering larger transactions than ever before, the nature of these transactions require that the largest of these deals be accounted for differently than last year."

Oracle Corporation is the world's leading supplier of software for information management, and the world's second largest independent software company. With annual revenues of over $6 billion, the company offers its database, tools and application products, along with related consulting, education, and support services, in more than 145 countries around the world.

For more information about Oracle, call Oracle Investor Relations at 650-506-4073. Oracle's World Wide Web address is (URL) http://www.oracle.com/ .

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act 1995: Information in this release relating to Oracle's future prospects which are "forward-looking statements" are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not necessarily limited to the following: (1) Management's ability to manage growth, continuously hire and retain significant numbers of qualified employees, forecast revenues and control expenses continues to be a challenge. An unexpected decline in the growth rate of revenues without a corresponding and timely slowdown in expense growth could have a material adverse effect on results of operations. (2) The market for Oracle's products is intensely competitive and is characterized by rapid technological advances and frequent new product introductions. There can be no assurances that Oracle will continue to introduce new products and new versions of existing products that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve market acceptance. (3) Intense competition in the various markets in which Oracle competes may put pressure on Oracle to reduce prices on certain products, particularly in the departmental database marketplace. (4) Delays in product delivery or closing of sales can cause quarterly revenues and income to fall significantly short of anticipated levels. (5) Oracle is introducing new products, such as web applications servers and network computing software; the market acceptance and contribution to Oracle's revenues of these products cannot be assured. (6) A significant amount of current demand for applications software may be generated by customers in the process of replacing and upgrading applications in order to accommodate the change in date to the year 2000. Once such customers have completed such preparations, the software industry and Oracle may experience a significant deceleration from the strong annual growth rates recently experienced in the applications software marketplace. In addition, Oracle may generally experience increased expenses in addressing issues associated with the transition to software that is year 2000 compliant. Oracle undertakes no obligation to update information contained in this release. For further information regarding risks and uncertainties associated with Oracle's business, please refer to the "Risk Factors" section of Oracle Corporation's SEC filings, including, but not limited to, its annual report on Form 10-K for the year ended May 31, 1997, copies of which may be obtained by contacting Oracle Corporation's Investor Relations Department at 650-506-4073 or Oracle's Fax-on-Demand service 800-ORCL-NOW (672-5669).

NOTE: Oracle is a registered trademark of Oracle Corporation.
                              ORACLE CORPORATION

                    CONSOLIDATED STATEMENTS OF OPERATIONS
                   ($ in thousands, except per share data)
                                 (unaudited)

                                    2nd Quarter Ended      Six Months Ended
                                        November 30,           November 30,

                                    1997       1996      1997       1996
    REVENUES
      Licenses and other          $645,366   $624,137 $1,176,008 $1,085,985
      Services                     968,361    687,236  1,806,548  1,277,708
                                 ---------   ---------  --------  ---------
        Total Revenues           1,613,727  1,311,373  2,982,556  2,363,693

    OPERATING EXPENSES
      Sales and marketing          528,490    454,688    977,941    814,538
      Cost of services             548,631    377,483  1,016,798    713,590
      Research and development (1) 183,217    135,300    342,884    252,509
      General and administrative    81,383     69,714    156,897    139,993
      Acquired in-process research
       and development (2)              --         --    167,054         --
                                 ---------   --------   --------  ---------

        Total Operating Expenses 1,341,721  1,037,185  2,661,574  1,920,630
                                 ---------  ---------  ---------  ---------
    OPERATING INCOME               272,006    274,188    320,982    443,063

      Other income (expense) (2)    16,248      6,275     56,222     13,605
                                 ---------  ---------  ---------  ---------
    INCOME BEFORE TAXES            288,254    280,463    377,204    456,668

      Provision for income taxes   100,930    100,967    181,409    164,401
                                 ---------  ---------  ---------  ---------
    NET INCOME                    $187,324   $179,496   $195,795   $292,267
                                 =========  =========  =========  =========
    EARNINGS PER SHARE (2)           $0.19      $0.18      $0.19      $0.29

    Common and common
     equivalent shares           1,008,558  1,013,924  1,007,412  1,012,320

(1)In accordance with Statement of Financial Accounting Standards No. 86, $12,895 and $7,383 were capitalized in the quarters ended November 30, 1997 and 1996, respectively.Amortization of capitalized software costs was $12,804 and $7,521in the quarters ended November 30, 1997 and 1996, respectively.

(2)Acquired in-process research and development represents charges of $91,500 and $75,554, respectively, for the Treasury Services Corporation and Navio Communications, Inc. merger transactions that closed in August, 1997.Excluding the effect of these transactions, which also included a credit of $25,726 for minority interest in other income (expense), the provision for income taxes would have been 35%, andnet income and earnings per share for the first six months of fiscal 1998 would have been $337,123 and $0.33 per share, respectively.

                              ORACLE CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               ($ in thousands)

                                                  November 30,      May 31,
                                                     1997            1997
                                                 (unaudited)
    ASSETS

    Current Assets
      Cash and short-term investments             $1,514,395     $1,213,190
      Trade receivables, net                       1,321,368      1,540,470
      Prepaid and refundable income taxes            265,996        274,366
      Other current assets                           210,634        243,070
                                                   ---------      ---------
        Total Current Assets                       3,312,393      3,271,096
                                                   ---------      ---------
    Long-term cash investments                       139,863        116,337
    Property and equipment, net                      898,967        868,948
    Computer software development costs, net          99,029         98,981
    Other assets                                     312,465        268,953

    TOTAL ASSETS                                  $4,762,717     $4,624,315
                                                   =========      =========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
      Notes payable, including current maturities     $9,992         $3,361
      Accounts payable                               206,642        185,444
      Income taxes                                   129,193        203,646
      Customer advances and unearned revenues        615,752        602,862
      Other current liabilities                      762,510        926,826
                                                   ---------      ---------
        Total Current Liabilities                  1,724,089      1,922,139
                                                   ---------      ---------
    Long-term debt                                   304,602        300,836

    Long-term liabilities                             57,298         24,226

    Deferred income taxes                              8,153          7,402

    Stockholders' equity                           2,668,575      2,369,712
                                                   ---------      ---------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $4,762,717     $4,624,315
                                                   =========      =========

SOURCE  Oracle Corporation


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