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Tuesday, September 20, 2011

Oracle Reports YoY Earnings Increase (Charts) *Revenues, Net Income, EPS Up* ORCL

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Oracle (ORCL) reported QE August 2011 financial results on September 20, 2011
*Charts and commentary have been updated for Oracle QE August 2011 financial results*


Oracle Reports YoY Earnings Increase: Revenues; Net Income, EPS Up

Oracle Summary QE August 2011 Financial performance dropped QoQ as the QE August 2011 is normally the annual cyclical low fro total revenues, operating income, net income, earnings per share, cash flow per share, gross margin, operating margin, and net margin. The negative on Oracle has been the debt, but this dropped from 22% to 20% of total assets QoQ. The QE May tends to be an annual cyclical peak and the QE August is the annual cyclical low for Oracle, so the YoY increases are a definite positive. Financial position continues as adequate capital with moderate debt and reasonable liquidity.

Oracle Income Statement QE August 2011 Oracle reported total revenues of $8.37 billion, net income of $2.68 billion, and earnings per share of $0.36. From the prior quarter QE May 2011, total revenues were down -22%, net income down -43%, and earnings per share down -42%. From the prior year QE August 2010, these were up +12%, up +36%, and up +33%, respectively. Gross margin (see note below), operating margin, and net margin were down QoQ at 76.26%, 32.04%, and 21.97%, respectively. Cash flow from operations of $1.05 was down QoQ but up YoY. The operating expense ratio (operating expenses divided by total revenues) of 44.22% is about average, but up QoQ. [Note: Oracle does not report a gross profit, but includes some allocated cost of revenues in operating expenses as line items. For this analysis, these allocated cost of revenues have been reclassified as cost of revenues and operating expenses are therefore the commonly reported line items of most companies. The gross profit reviewed is not a true gross profit. Operating margin and net margin are not affected by this reclassification.]

Oracle Balance Sheet QE August 2011 Oracle's total assets increased +.4% QoQ and +13% YoY to a record $73.86 billion from the prior quarter of $73.54 billion. The capital to assets ratio (total stockholders' equity divided by total assets) of 55.83% is a multi-quarter high. The current ratio (current assets divided by total assets) of 53.08% is also at the higher end of the historical range The return on assets  of +13.00% is historically very strong and has increased for 4 consecutive quarters. Total debt is lower at 20% of total assets.

Oracle Outlook Oracle estimates QE November GAAP earnings per share of $0.44 to $0.46 and Non-GAAP of $0.56 to $0.58. This would be an increase both QoQ and YoY.


Oracle Financial Performance by the Quarters (Charts)

Oracle Earnings Per Share Below is a chart of quarterly earnings per share. Current Earnings per Share of $0.36 are down -42% QoQ and up +33% YoY. The prior peaks have been the QE May 2011, 2010, and 2009 of $0.62, $0.46, and $0.38, respectively. The lows have been the QE August 2011, 2010, and 2009 of $0.36, $0.27, and $0.22, respectively. The QE May is the strongest quarter and the QE August is the weakest quarter for Oracle. These peaks and lows indicate an annual cyclical nature to Oracle's business. The chart high has been $0.62 for the QE May 2011 and the chart low has been $0.22 for QE August 2009. The EPS chart average is $0.34.


Oracle Cash Flow per Share Below is a chart of cash flow from operations per share. Current Cash Flow per Share of $1.05 is a drop from the prior QE May 2011 of $2.17, which was the peak on the chart. The CFS chart average is $1.62.


Oracle Total Revenues, Operating Income, and Net Income Below is a chart of quarterly total revenues, operating income, and net income. Current Total Revenues of $8.37B are down -22% QoQ and up +12% YoY. Total Revenues have increased 6 of the past 8 quarters. Current Operating Income of $2.68B is also down QoQ and up YoY and increased 4 of the past 6 quarters. Net Income of $1.84B is down -43% QoQ and up +36% YoY. Net Income has 4 of the past 6 quarters.


Oracle Gross Margin, Operating Margin, and Net Margin Below is a chart of quarterly gross margin, operating margin, and net margin. Current Gross Margin (see note below) of 76.26% is down QoQ and below the chart average of 77.01%. Current Operating Margin of 32.04% is down QoQ and below the chart average of 33.14%. Current Net Margin of 21.97% is also down QoQ and below the chart average of 23.00%. The average income tax rate of 25.54% is a 4-quarter high and above average, decreasing the net margin. [Note: Oracle does not report a gross profit, but includes some allocated cost of revenues in operating expenses as line items. For this analysis, these allocated cost of revenues have been reclassified as cost of revenues and operating expenses are therefore the commonly reported line items of most companies. The gross profit reviewed is not a true gross profit. Operating margin and net margin are not affected by this reclassification.]


Oracle Return on AssetsROA, an annualized return on average assets for the 12 months (4 quarters) ended. Current Return on Assets of +13.00% is a multi-quarter high, very strong, and has increased 4 consecutive quarters. The ROA chart average is 11.79%.


Oracle Growth Rates Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for total revenues and earnings per share. Current Total Revenues of -22% are a multi-quarter low and below the TR chart average of +8.72%. Current Earnings per Share of -42% is also a multi-quarter low and below the EPS chart average of +15.87%. The current drop in QE August 2011 was expected as the annual cyclical low.


Oracle Revenue Sources Below is a chart of quarterly revenue sources, as a percentage of total revenues. For the current QE August 2011, the trend is clearly a decrease in Software offset by increases in Hardware and Service.


Oracle Geographic Revenues Below is a chart of quarterly geographic revenues, as a percentage of total revenues. For the current QE August 2011, the trend is a decrease in Americas and Europe, Middle East, Africa offset by an increase in Asia Pacific.


Oracle Operating Expense Ratio Below is a chart of quarterly operating expense ratio, which is operating expenses divided by total revenues. The current Operating Expense Ratio of 44.22% is a 4-quarter high and about the same as the OER chart average of 44.07%. This indicates in the current QE August 2011 decreased efficiency plus a higher proportion of revenues not reaching the bottom line, net income, and earnings per share.



ORACLE REPORTS Q1 GAAP EPS UP 34% TO 36 CENTS; Q1 NON-GAAP EPS UP 14% TO 48 CENTS

Q1 Software New License Sales Up 17%, Twelve Month Operating Cash Flow Up 46% to $12.8 Billion

REDWOOD SHORES, Calif., Sept. 20, 2011 -- Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2012 Q1 GAAP total revenues were up 12% to $8.4 billion, while non-GAAP total revenues were up 11% to $8.4 billion. Both GAAP and non-GAAP new software license revenues were up 17% to $1.5 billion. GAAP software license updates and product support revenues were up 17% to $4.0 billion, while non-GAAP software license updates and product support revenues were up 16% to $4.0 billion. Both GAAP and non-GAAP hardware systems products revenues were down 5% to $1.0 billion. GAAP operating income was up 40% to $2.7 billion, and GAAP operating margin was 32%. Non-GAAP operating income was up 21% to $3.6 billion, and non-GAAP operating margin was 42%. GAAP net income was up 36% to $1.8 billion, while non-GAAP net income was up 16% to $2.5 billion. GAAP earnings per share were $0.36, up 34% compared to last year while non-GAAP earnings per share were up 14% to $0.48. GAAP operating cash flow on a trailing twelve month basis was $12.8 billion, up 46% from last year.

“New software license sales grew 17%,” said Oracle President and CFO, Safra Catz. “This strong organic growth coupled with disciplined business management enabled yet another increase in our operating margin in Q1. Operating cash flow increased this quarter to $5.4 billion, up $1.6 billion from $3.8 billion in Q1 of last year."

“Our high-end server business – Exadata, Exalogic, and SPARC M-Series – delivered solid double digit revenue growth in Q1,” said Oracle President, Mark Hurd. “In contrast, revenue declined in our low-end server business. By moving away from low-margin commodity hardware and focusing on high-end servers, we increased our hardware gross margins from 48% to 54%. Our strategy to grow the profitable parts of our hardware business is paying off.”

“Next week Oracle will announce a new high-performance SPARC microprocessor, and a new high-end server called a SPARC SuperCluster,” said Oracle CEO, Larry Ellison. “The new SPARC T4 microprocessor is up to 5 times faster than the T3 microprocessor it replaces. The new SuperCluster is engineered to use the SPARC T4 microprocessor and the Exadata flash and disk storage system to deliver extreme record-breaking performance.”

In addition, Oracle also announced that its Board of Directors declared a quarterly cash dividend of $0.06 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 12, 2011, with a payment date of November 2, 2011.


About Oracle
Oracle (NASDAQ: ORCL) is the world’s most complete, open, and integrated business software and  hardware systems company. For more information about Oracle, please visit http://www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.


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