By Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) — Oracle Corp. on Tuesday reported a 36% jump in profit in its fiscal first quarter, posting results that one analyst said should dispel worries of a major slump in corporate tech budgets.
Shares of Oracle were up more than 3% in after-hours trading.
Redwood Shores, Calif.-based Oracle /quotes/zigman/76584/quotes/nls/orcl ORCL +0.68% reported a profit of $1.84 billion, or 36 cents a share, compared with a profit of $1.35 billion or 27 cents a share for the year-earlier period.
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Revenue was $8.37 billion, up from $7.5 billion. Adjusted income was 48 cents a share.
Analysts had expected the company to report earnings of 47 cents a share, on revenue of $8.36 billion, according to a consensus survey by FactSet Research.
“It was a solid quarter, but it was not spectacular,” Canaccord Genuity analyst Richard Davis said in a phone interview. “What it reflects is that the world is not coming to an end. It’s not great, but it’s not 2008 all over again.”
Oracle also issued an outlook that was generally in-line with expectations, Davis said.
Oracle said it anticipates adjusted revenue to grow from the year-earlier period by 4% to 8%. On a GAAP basis, Oracle said it expects revenue growth of 5% to 9%.
The company also said it expects adjusted earnings of between 56 cents a share and 58 cents a share.
Analysts had expected year-over-year revenue growth of 8% and adjusted earnings of 56 cents a share, according to data from FactSet research.
The company’s new software-license sales rose 17%, Oracle co-President Safra Catz said in a statement.
Mark Hurd, the company’s other co-president, said the company’s high-end server business posted double-digit growth, but revenue declined among low-end servers.
“By moving away from low-margin commodity hardware and focusing on high-end servers, we increased our hardware gross margins from 48% to 54%,” Hurd said in a statement. “Our strategy to grow the profitable parts of our hardware business is paying off.”
In a note, Citigroup analyst Walter Pritchard cited Oracle’s “surprisingly” strong software license sales in Europe, the Middle East and Africa, in a clear reference to the worries about the health of European tech market.
“What European weakness?” Pritchard quipped in a note.
Asked about what Oracle is seeing in Europe, Catz told analysts, “Our bottom line is that I think we’re being successful where other folks are being less successful because our products are so compelling. We had many, many orders in Europe for really sort of across the board for our product line.”
She added: “So I’ll tell you, I think we have a lot of company-specific momentum across the board.”