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Financial News Details

Oracle Reports Fiscal Third Quarter Results: Earnings per Share $0.09; 35%

March 14, 2002

Operating Margin Improves Two Percentage Points

Redwood Shores, Calif. 14-MAR-2002 01:00 PM Today, Oracle Corporation announced third quarter revenues of $2.2 billion and net income of $508 million. Earnings per share of $0.09 compares with $0.10 in Q3 last year. Third quarter operating margin improved two percentage points to 35% versus 33% the prior year. New software license sales were down 30%, while software license renewals grew 5%. Overall services revenues were down 7%, with support revenues flat with the prior year.

"While the overall economy may have begun its recovery, technology spending is lagging," said Oracle CFO Jeff Henley. "In addition, certain industries such as telecommunications, financial services and high-tech manufacturing, where Oracle has been particularly strong, continue to be under stress. As a result, our sales to companies in these industries have slowed markedly compared to a year ago. As the recovery becomes more broad based, we expect technology spending to increase and our software sales to improve."

"It's clear that tight IT budgets are making customers more price sensitive," said Oracle CEO Larry Ellison. "Our aggressively priced products are actually selling quite well in this economic climate. For example, our application server sales grew 35% this quarter while sales of competitive products declined year over year. Sales of the lower priced standard edition of our database were up 14% this quarter. As the economy improves, many of these Standard Edition customers should upgrade to Enterprise Edition."

"Many of the world's best managed and most profitable business are now running their businesses using Oracle's E-business Suite," Ellison continued. "This past quarter Emerson, one of America's most admired companies, decided to standardize on our integrated suite of CRM and ERP applications. We also had many other competitive wins including France Telecom, AT&T, The Babcock & Wilcox Company, UK National Health Service and Guangzhou Metro. Today, more than 1400 companies are live on the E-business Suite."

Oracle is the world's largest enterprise software company. For more information about Oracle, including supplemental financial information, please call Investor Relations at (650) 506-4073 or visit Oracle on the web at

"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) Delays in closing of sales, reductions in size of individual sales without an offsetting increase in volume or delays in product delivery can cause quarterly revenues and income to fall significantly short of anticipated levels. (2) Management's ability to forecast revenues and control expenses, especially on a quarterly basis, continues to be a challenge. The economic, political and other uncertainties caused (or exacerbated) by terrorist attacks upon the United States add to this challenge. An unexpected decline in revenues without a corresponding and timely slowdown in expense growth could have a material adverse effect on results of operations. (3) Oracle is introducing new products, such as Oracle 9i database and 9i application server, internet procurement and supply chain management software, customer relationship management applications and application hosting services; the market acceptance and contribution to Oracle's revenues of these products cannot be assured. (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) 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

                              ORACLE CORPORATION

                (amounts in thousands, except per share data)


                                    Three Months Ended     Nine Months Ended
                                        February 28,          February 28,
                                   -------------------    -------------------

                                      2002       2001       2002      2001
                                      ----       ----       ----      ----
      Licenses and other            $789,578 $1,125,083 $2,340,334 $3,050,559
      Services                     1,439,765  1,549,284  4,488,389  4,545,229
                                  ---------- ---------- ---------- ----------

        Total revenues             2,229,343  2,674,367  6,828,723  7,595,788
                                  ---------- ---------- ---------- ----------

      Sales and marketing            514,816    665,605  1,621,449  1,879,434
      Cost of services               547,467    708,614  1,767,178  2,077,490
      Research and development       283,231    301,455    794,014    818,762
      General and administrative     105,090    120,570    301,621    337,937

                                  ---------- ---------- ---------- ----------

        Total operating expenses   1,450,604  1,796,244  4,484,262  5,113,623
                                  ---------- ---------- ---------- ----------

    OPERATING INCOME                 778,739    878,123  2,344,461  2,482,165

      Net investment gains (losses)
       related to equity securities   (7,510)   (22,437)   (14,199)   (20,472)

      Other income, net               10,271     47,745     82,175    183,862
                                  ---------- ---------- ---------- ----------

    INCOME BEFORE TAXES              781,500    903,431  2,412,437  2,645,555

      Provision for income taxes     273,525    320,718    844,353    939,353
                                  ---------- ---------- ---------- ----------

    NET INCOME                      $507,975   $582,713 $1,568,084 $1,706,202

                                  ========== ========== ========== ==========

      Basic                            $0.09      $0.10      $0.28      $0.30
      Diluted                          $0.09      $0.10      $0.27      $0.29

      Basic                        5,492,297  5,595,808  5,533,493  5,594,765
      Diluted                      5,669,334  5,851,333  5,715,071  5,886,397

                              ORACLE CORPORATION

                               ($ in thousands)

                                                     February 28,    May 31,
                                                        2002          2001
                                                        ----          ----

    Current Assets

      Cash and short term investments                $5,610,974    $5,887,661
      Trade receivables, net                          1,621,413     2,432,131
      Prepaid and refundable income taxes               457,719       272,742
      Other current assets                              331,890       370,616
                                                    -----------   -----------

        Total Current Assets                          8,021,996     8,963,150
                                                    -----------   -----------

    Long-term cash investments                          329,775            --
    Property and equipment, net                         984,766       974,751
    Prepaid taxes                                       396,373       376,030
    Other assets                                        642,012       716,229

                                                    -----------   -----------

    TOTAL ASSETS                                    $10,374,922   $11,030,160
                                                    ===========   ===========


    Current Liabilities
      Notes payable, including current maturities        $2,059        $2,849
      Accounts payable                                  238,297       270,112
      Income taxes                                      972,162       767,087
      Customer advances and unearned revenues         1,013,778     1,213,529
      Other current liabilities                       1,338,324     1,663,042
                                                    -----------   -----------

        Total Current Liabilities                     3,564,620     3,916,619
                                                    -----------   -----------

    Long-term debt                                      300,890       300,847
    Deferred income taxes                               310,173       327,788
    Other long-term liabilities                         209,538       207,135
    Stockholders' equity                              5,989,701     6,277,771
                                                    -----------   -----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $10,374,922   $11,030,160
                                                    ===========   ===========

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