Updated from 7:02 p.m. EDTOracle ( ORCL) beat its own earnings expectations for its fiscal fourth quarter, but the news was nearly eclipsed by the increasingly ugly fight to take over rival software maker PeopleSoft ( PSFT). As Oracle CEO Larry Ellison was announcing his company's stronger-than-expected results, J.D. Edwards ( JDEC) announced that it was
Oracle's improved performance comes as investors are focused on the company's hostile $5.1 billion bid to buy PeopleSoft, which is itself attempting a friendly takeover of rival software maker J.D. Edwards. For the quarter, Oracle's revenue from new application licenses was essentially flat year over year at $246 million, but higher than many analysts had expected. Oracle CEO Larry Ellison pointed to the application results as evidence that his company is overtaking PeopleSoft on its home grounds. "Many of our major competitors showed significant license revenue declines in their most recently reported quarter. For instance, in PeopleSoft's most recent quarter their applications new license revenues decreased 39% to $80 million. We believe that our growth and PeopleSoft's decline resulted in part from an increase in our competitive win rate over PeopleSoft, and the fact that we are beginning to replace PeopleSoft at a number of major accounts," he said in a prepared statement. For the year, however, new application license revenue was off 14.4%, to $605.2 million, from $706.6 million. Cameron Steele of RBC Capital Markets noted that Oracle, which historically has had a weak applications business, took share in the fourth quarter from Siebel Systems ( SEBL) and J.D. Edwards, as well as from PeopleSoft. But not from SAP ( SAP), a company some analysts think could
benefit from the turmoil in the software industry. (RBC does not have a banking relationship with Oracle.) Oracle's core data business improved in the last quarter, rising 3% to $933.5 million, from $904.3 million, while dropping 4.4% for the year, to $2.62 billion, from $2.74 billion. Earlier Thursday, PeopleSoft said its board voted unanimously to recommend that stockholders reject Oracle's takeover bid, and Oracle responded by expressing disappointment in the action. The company has given no sign that it will back off the attempt. Many analysts believe that Oracle's bid of $16 a share is too low, and before today's flurry of announcements had expected Ellison to sweeten the deal.
For the year, net income increased 4% to $2.31 billion, or 43 cents a share, a penny better than analysts expected. But total revenue was off 2% to $9.5 billion. After closing higher by 6 cents, or 0.5%, to $13.33, in regular trading, Oracle was up 19 cents in after-hours trading.