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Financial News Details

Oracle Net Income Up 62%, Earnings per Share $0.11; Application Sales Up 66%, Database Sales Up 19%

December 14, 2000

Operating Margin increases 11 points to 36%

REDWOOD SHORES, Calif. 14-DEC-2000 Today, Oracle Corporation announced that second quarter net income increased 62% to $623 million, or $0.11 per share, while revenue grew to $2.7 billion. This compares to $2.3 billion in revenue, $384 million in net income, and $0.06 per share in Q2 last year. Applications software sales increased 66% to $279 million, while database software sales grew 19% to $775 million. Total software license revenue was up 25% to $1.1 billion, while total service revenue increased 9% to $1.5 billion for the quarter.

"Our applications business is strong and getting stronger," said Oracle CEO, Larry Ellison. "Oracle's new e-business suite puts every aspect of a business -- marketing, sales, service, procurement, supply chain, manufacturing, accounting, human resources -- everything, on the Internet. All the applications in our suite are designed and engineered to work together, so customers buying the entire suite don't need to do any systems integration."

"Customers buying a part of the suite are doing systems integration to connect our applications with applications from other vendors," Ellison continued. "This quarter's results prove that we're winning more and more of these best-of-breed battles against Ariba, I2, Seibel and other niche specialists. And once a customer uses one of our applications, it's just a matter of time before they move to the entire suite. Systems integration is so complex and expensive that nobody really wants to do it."

"This quarter's numbers are even more impressive when you factor out currency fluctuations," said Oracle Chief Financial Officer, Jeff Henley . "The proper way to measure our growth year over year is in constant dollars. Using that measure, quarterly applications software sales were up 73% while database software sales were up 26%. Total license growth increased 32%. That's stellar growth for a company our size. Add the fact that it took us just two years to double operating margins and more than double profits, and you have a measure of the strength of our business."

Oracle Corporation is the world's second largest software company. With annual sales of more than $10 billion, Oracle provides the software that powers the Internet. For more information about Oracle, please call Investor Relations at (650) 506-4073 or visit Oracle on the web at http://www.oracle.com.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 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, especially on a quarterly basis, 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) Oracle is introducing new products, such as internet procurement and supply chain management software, customer relationship management applications and application hosting services, as well as assisting its customers in forming exchanges for a number of business procurement needs; the market acceptance and contribution to Oracle's revenues of these products and exchanges cannot be assured. (3) Delays in product delivery or closing of sales can cause quarterly revenues and income to fall significantly short of anticipated levels. (4) Oracle has recently made changes to its pricing model which could lead to a decline or delay in sales as its sales force and customers adjust to the new pricing policies. Intense competition in the various markets in which Oracle competes may also put pressure on Oracle to reduce prices on certain products. (5) A weakening of the economy may affect the overall demand for computer software and services which could result in decreased revenues or lower revenue growth rates. (6) 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. 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 and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or Oracle's Investor Relations website at http://www.oracle.com.

                              ORACLE CORPORATION

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


                               Three Months Ended       Six Months Ended
                                  November 30,            November 30,
                            -----------------------  -----------------------
                                2000        1999        2000        1999
                                ----        ----        ----        ----


    REVENUES
      Licenses and other      $1,118,238   $902,632  $1,925,476  $1,534,813
      Services                 1,541,308  1,419,251   2,995,945   2,771,587
                              ---------- ----------  ----------  ----------
        Total revenues         2,659,546  2,321,883   4,921,421   4,306,400
                              ---------- ----------  ----------  ----------

    OPERATING EXPENSES

      Sales and marketing        640,865    631,433   1,213,829   1,169,859
      Cost of services           694,998    753,170   1,368,876   1,509,920
      Research and development   266,280    248,160     517,307     484,101
      General and administrative 111,402    113,055     217,367     220,592
                              ---------- ----------  ----------  ----------
        Total operating
         expenses              1,713,545  1,745,818   3,317,379   3,384,472
                              ---------- ----------  ----------  ----------


    OPERATING INCOME             946,001    576,065   1,604,042     921,928

    Net investment gains
     (losses) related to
     marketable securities (A)   (13,468)    (5,083)      1,965      (8,423)
    Other income, net             33,348     20,533     136,117      42,220
                              ---------- ----------  ----------  ----------

    INCOME BEFORE TAXES          965,881    591,515   1,742,124     955,725


      Provision for income taxes 343,069    207,031     618,635     334,505
                              ---------- ----------  ----------  ----------

    NET INCOME                  $622,812   $384,484  $1,123,489    $621,220
                              ========== ==========  ==========   =========

    EARNINGS PER SHARE (B)
      Basic                        $0.11      $0.07       $0.20       $0.11
      Diluted                      $0.11      $0.06       $0.19       $0.10

    WEIGHTED SHARES OUTSTANDING (B)

      Basic                    5,584,428  5,717,780   5,594,243   5,719,812
      Diluted                  5,874,987  6,012,600   5,903,929   5,988,704

    -----------------------
    (A)  Net investment gains (losses) related to marketable securities relate
         to actual sales of marketable securities, and the Company's equity
         share in the results of non-consolidated subsidiaries.

    (B)  All earnings per share and weighted shares outstanding amounts have
         been adjusted to reflect a 2:1 stock split during the quarter ended
         November 30, 2000.



                              ORACLE CORPORATION

                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               ($ in thousands)

                                                  November 30,     May 31,
                                                      2000          2000
                                                      ----          ----
                                                  (unaudited)
    ASSETS

    Current Assets

      Cash and short term investments               $4,356,165   $7,761,998
      Trade receivables, net                         1,935,767    2,533,964
      Prepaid and refundable income taxes              223,837      212,829
      Other current assets                             307,695      374,543
                                                    ----------   ----------
        Total Current Assets                         6,823,464   10,883,334
                                                    ----------   ----------

    Long-term cash investments                          30,000      110,000
    Property and equipment, net                        941,793      934,455
    Prepaid taxes - long term                          289,624      322,379
    Other assets                                       838,886      826,611
                                                    ----------   ----------


    TOTAL ASSETS                                    $8,923,767  $13,076,779
                                                   ===========   ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
      Notes payable, including current maturities       $2,596       $2,691
      Accounts payable                                 282,738      287,495
      Income taxes                                     526,492    2,821,776
      Customer advances and unearned revenues        1,053,809    1,133,482
      Other current liabilities                      1,301,990    1,616,794
                                                    ----------   ----------

        Total Current Liabilities                    3,167,625    5,862,238
                                                    ----------   ----------


    Long-term debt                                     300,802      300,770

    Long-term liabilities                              191,257      186,178

    Deferred income taxes                              337,620      266,130

    Stockholders' equity                             4,926,463    6,461,463
                                                    ----------   ----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $8,923,767  $13,076,779
                                                   ===========   ==========

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