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Financial News Details

Oracle Net Income Up 16%, Earnings per Share $0.10; Application Sales Up 25%, Database Sales Up 6%

March 15, 2001

3,000 Customers Implementing 11i E-business Suite

REDWOOD SHORES, Calif. 15-MAR-2001 06:00 AM Today, Oracle Corporation announced that third quarter income increased 16% to $583 million or $0.10 per share, while revenue grew to $2.7 billion. This compares to $2.4 billion in revenue, $503 million in net income, and $0.08 per share in Q3 last year, excluding extraordinary investment gains. Application software sales increased 25% to $249 million while database software sales grew 6% to $823 million. Service revenue increased 12% to $1.5 billion for the quarter.

Oracle has over 3,000 customers in the process of implementing the 11i E-business suite. More than 210 of those customers have already gone live on 11i applications including JDS Uniphase, TeliaNet, Compaq, Fosters Brewing Company, and Westpac. This past quarter, hundreds of additional companies have committed to the E-business Suite including Healthsouth, Cisco Systems, Qwest Communications, Americredit, CIENA, and McGraw-Hill Education.

"Rapid application implementation is the key to customers getting a quick return on their software investment," said Oracle CEO Larry Ellison. "Oracle applications are ideally suited for rapid implementations because our E-business suite is complete and integrated -- no application customizations are required. Customers can begin selling more with our Global CRM in 90 days, and spending less with our Internet Procurement in 30 days. No other applications can be implemented so quickly and inexpensively. Rapid application implementation is important in this economic climate because companies focus on projects with a rapid ROI."

"The U.S. economic downturn over the past several months clearly affected our revenue and profit growth more than we anticipated, due to a sharp downturn in completed transactions in the last few days of the quarter, and the current economic uncertainty continues to limit our visibility going forward," said Oracle CFO Jeffrey O. Henley. "However, we are proud of our ability to achieve 33% operating margins in the quarter, resulting in a 2 percentage point improvement compared to last year. Our ongoing efforts to improve our cost structure over the past two years have positioned us well to weather the current economic storm. Looking ahead, we plan to tightly adhere to the e-business cost reduction plan already in place, which hopefully will allow us to maintain our improvements in productivity and efficiency despite a difficult environment."

Oracle Corporation is the world's second largest software company. With annual sales of more than $10.9 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

"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) A weakening of economic factors, particularly in the United States economy, may affect the overall demand for computer software and services which could result in decreased revenues or lower revenue growth rates. (2) Delays in closing of sales or product delivery can cause quarterly revenues and income to fall significantly short of anticipated levels. (3) 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. (4) 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. (5) Oracle has 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 and practices. Intense competition in the various markets in which Oracle competes may also put pressure on Oracle to reduce prices on certain products. (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

                              ORACLE CORPORATION

                (amounts in thousands, except per share data)

                              Three Months Ended        Nine Months Ended

                                   February                 February
                               2001         2000        2001         2000
      Licenses and other    $1,125,083   $1,071,373  $3,050,559   $2,606,186
      Services               1,549,284    1,378,045   4,545,229    4,149,632

        Total revenues       2,674,367    2,449,418   7,595,788    6,755,818

      Sales and marketing      665,605      594,696   1,879,434    1,764,555
      Cost of services         708,614      707,261   2,077,490    2,217,181
      Research and development 301,455      255,552     818,762      739,653
      General and
       administrative          120,570      122,188     337,937      342,780

        Total operating
         expenses            1,796,244    1,679,697   5,113,623    5,064,169

    OPERATING INCOME           878,123      769,721   2,482,165    1,691,649

      Net investment
       gains (losses)
       related to marketable
       securities (A)          (22,437)     423,882     (20,472)     415,459

      Other income, net         47,745       15,727     183,862       57,947

    INCOME BEFORE TAXES        903,431    1,209,330   2,645,555    2,165,055

      Provision for income
       taxes                   320,718      446,154     939,353      780,659

    NET INCOME                $582,713     $763,176  $1,706,202   $1,384,396


      Basic                      $0.10        $0.14       $0.30        $0.24
      Diluted                    $0.10        $0.13       $0.29        $0.23

      Basic                  5,595,808    5,637,878   5,594,765    5,692,500
      Diluted                5,851,333    5,996,378   5,886,397    5,991,260

    (A) Net investment gains (losses) related to marketable securities in the
        quarter ended February 28, 2001 relate to sales of marketable
        securities, provision for investment losses, and the Company's equity

        share in the results of non-consolidated subsidiaries.

        Net investment gains related to marketable securities in the quarter
        ended February 29, 2000 relate to the gain on sale of existing shares
        in Liberate Technologies in connection with its Secondary Public
        Offering, gains on sales of other marketable securities, and the
        Company's equity share in the results of non-consolidated
        subsidiaries.  Excluding the effect of these transactions, the
        effective tax rate and provision for income taxes would have been 36%
        and $282,760, respectively, and net income and fully diluted earnings
        per share for the quarter ended February 29, 2000 would have been
        $502,688 and $0.08, respectively.

                              ORACLE CORPORATION

                               ($ in thousands)

                                                    February 28,   May 31,
                                                       2001         2000

    Current Assets

      Cash and short term investments               $4,985,238    $7,761,998
      Trade receivables, net                         1,952,119     2,533,964
      Prepaid and refundable income taxes              210,534       212,829
      Other current assets                             311,151       374,543

        Total current assets                         7,459,042    10,883,334

    Long-term cash investments                          10,000       110,000
    Property and equipment, net                        946,268       934,455
    Prepaid taxes                                      261,326       322,379
    Other assets                                       774,104       826,611

    TOTAL ASSETS                                    $9,450,740   $13,076,779


    Current Liabilities
      Notes payable, including current maturities       $2,814        $2,691
      Accounts payable                                 277,705       287,495
      Income taxes                                     540,124     2,821,776
      Customer advances and unearned revenues        1,040,712     1,133,482
      Other current liabilities                      1,444,305     1,616,794

        Total current liabilities                    3,305,660     5,862,238

    Long-term debt                                     300,931       300,770

    Long-term liabilities                              194,857       186,178

    Deferred income taxes                              325,219       266,130

    Stockholders' equity                             5,324,073     6,461,463

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $9,450,740   $13,076,779

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