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Oracle Beats but Hardware Sales Disappoint

Stocks in this article: ORCL

Oracle CEO Larry Ellison's conference call comments have been added to this story

REDWOOD SHORES, Calif. ( TheStreet) - As anticipated, Oracle (ORCL) reported record quarterly revenue in its fourth-quarter results after market close on Thursday, but weak hardware sales pushed the company's stock down more than 3% in extended trading.

Oracle brought in total revenue of $10.8 billion, a hike of 12% on the same period last year, and a shade above analysts' estimates of $10.75 billion.

Excluding items, the database giant earned 75 cents a share, up from 60 cents a share in the prior year's quarter. Analysts surveyed by Thomson Reuters were looking for earnings of 71 cents a share.

Oracle

Despite strong software performance, however, Oracle's revenue from hardware systems products was down 6% year-over-year to $1.2 billion. Investors responded negatively, pushing Oracle's shares down $1.23, or 3.79%, to $31.23 in extended trading.

The tech giant nonetheless lauded the performance of its Exadata and Exalogic systems. "Today there are more than 1,000 Exadata machines installed worldwide," said Oracle president Mark Hurd, in a statement. "Our goal is to triple that number in fiscal year 2012."

Oracle grew its new software licenses - a key metric of growth - by 19% year-over-year during the fourth quarter. "This strong organic growth combined with continuously improving operational efficiencies enabled us to deliver a 48% operating margin in the quarter," explained Oracle president and CFO Safra Catz, in a statement.

Oracle's growth in new software licenses, however, was down in comparison with its fiscal third-quarter performance when the company enjoyed year-over-year growth of 29%.

For the full year, Oracle brought in revenue of $35.9 billion, a jump of 33% from the prior year and just above Wall Street's estimate of $35.77 billion. Excluding items, Oracle earned $2.22 a share, an increase of 33% on the prior year, and above analysts' forecast of $2.18.

Oracle, thanks partly to its acquisition of Sun Microsystems last year, is eyeing opportunities in the burgeoning cloud computing market, where it's jostling with heavyweights like HP (HPQ) and IBM (IBM) as well as scores of smaller players.

"Over the past few years we added features to the Oracle database for both cloud computing and in-memory databases that led to increased database sales this past year," said Larry Ellison, the Oracle CEO, in the company's statement. "In fiscal year 2011 Oracle's database business experienced its fastest growth in a decade."

During a conference call after market close, the Oracle chief was quizzed about his acquisition strategy, explaining that he is not in a buying mood. "We had 19% software new license growth without acquisitions," he said, in response to an analyst's question. "Things are, by and large, not attractively priced now, and we're not buying them -- we can focus our energies on organic growth."

In addition to its results, Oracle's board has declared a quarterly cash dividend of 6 cents per share on Thursday. The dividend will be paid to stockholders at the close of business on July 13, with a payment date of August 3.

-- Written by James Rogers in New York.

>To follow the writer on Twitter, go to http://twitter.com/jamesjrogers.

>To submit a news tip, send an email to: tips@thestreet.com.

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