March 14, 1997 11:00 AM ET
Oracle Q3 results meet analysts' expectations
By Steve Hamm

  Oracle Corp.'s revenue growth might be losing some steam, but the database market leader just keeps chugging along.

On Thursday, the Redwood Shores, Calif., company reported third-quarter revenues of $1.4 billion, up 35 percent. Net income was $193 million, or 29 cents per share, excluding a $37 million charge related to Oracle's acquisition of Datalogix International Inc. A year ago, earnings per share were 22 cents.

Thursday's report was in line with most analysts' estimates.

Oracle Chief Financial Officer Jeff Henley said the company's nine-month revenue growth is about even with last year's, and the profit margin is nearly the same-20 percent. "If this train's slowing down, I don't see it yet," Henley said.

Oracle released its earnings after the close of regular trading on Wall Street but, encouraged by buy recommendations from several brokerages, investors had earlier pushed the price up by $2 per share to close at $36.12.

Nevertheless, the stock is still well off its 52-week high of $51, achieved in December. And it hasn't recovered from an 8 percent swoon it took earlier this week after PaineWebber Inc. and UBS Securities Inc. made bullish comments about its prospects.

Oracle's growth has slowed from the blistering pace of 42 percent for fiscal year 1996. But its applications business increased 61 percent in its third quarter. The company's revenues and profits are expected to get a boost from delivery of Oracle8, its next-generation database product, in June.

"There's real pent-up demand," said Edgar Bierdeman, an analyst with Dakin Securities, in San Francisco.

However, observers aren't expecting any major revenue gain from Oracle's Network Computer software, which is to be launched commercially on April 15. Henley said material revenues from the NC software aren't expected to show up for a couple of years.

Henley and Oracle President Ray Lane Thursday delivered an hour-long teleconference briefing for analysts to "set the record straight" on Oracle's performance and prospects, Henley said. In addition to providing context for the revenue numbers, Henley told analysts he expects the company's tax rate to drop by at least 1 percent this year. He said the employee head count, now 29,000, won't grow so fast.

Oracle is holding its own against Microsoft's database offering in the Windows NT space, Henley said; Oracle's NT database business grew more than 200 percent over where it was a year ago.

Henley called Microsoft an "awesome competitor," but dismissed Informix Software Inc., which is No. 2 in the database business. Informix's Universal Server, formally launched late last year, hasn't been warmly received in the marketplace, he said.

"They've done a great job of hyping their product," said Henley, "but we don't know any customer who has been given a production version of their server."

Informix officials couldn't be reached for comment late Thursday. But the Menlo Park, Calif., company's revenues grew only 23 percent in its fourth quarter, indicating no immediate revenue boost from sales of the new product.

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