Oracle posts strong gains, alleviating investor concern

Business software maker Oracle Corp. on Wednesday posted a 35% gain in second-quarter profit, topping Wall Street's expectations and alleviating the concerns of investors looking at the company as a gauge of the broader tech market's health.

Oracle said net income for the period ended Nov. 30 rose to $1.3 billion, or 25 www.cents a share, from $967 million, or 18 cents a share, in the same period a year earlier. Meanwhile, revenue rose to $5.3 billion from $4.16 billion.
Excluding special items, Oracle said earnings for the quarter were 31 cents a share. Analysts polled by Thomson Financial had been estimating Oracle would post earnings of 27 cents a share, on $5.04 billion in revenue.

Oracle Chief Financial Officer Safra Catz said in a prepared release that the results came thanks to "strong revenue growth across all product lines and geographies."
Oracle said sales of new software licenses grew 38% over the period a year earlier, marking the strongest quarterly increase in the past 10 years.

Analysts closely monitor Oracle's sales of new licenses to help them gauge the company's ability to wrangle new business, rather than depending on revenue drawn from maintaining and updating software already sold to existing customers.
Shares of Oracle jumped nearly 5% in after-hours trading to $21.73 following the company's quarterly earnings announcement.

Investors and analysts are especially interested in the health of Oracle's business now that the overall economy has faltered. Some have wondered whether the tough times will translate into fewer sales of Oracle's software to its many large customers in the financial, retail and other industries.

But Wednesday's results seemed to address those concerns in a resounding manner.
Oracle said its sales of new software application licenses grew 63% in the period compared to a year earlier.
Oracle's applications software is of particular interest to analysts, as the company has sought to build up its applications business in recent years -- mainly via acquisitions -- in order to provide a balance to its traditional database software business.
The increased emphasis on applications software has also drawn Oracle into tighter competition with German rival SAP AG.

SAP is expected to report fourth-quarter results in January.
Maintenance revenue has been a key point of contention between Oracle and SAP. An SAP subsidiary called TomorrowNow was attempting to undercut Oracle's lucrative product support business by pilfering documentation and offering cut-rate service for Oracle products, according to a lawsuit filed earlier this year by Oracle.
For its second quarter, Oracle said revenue from software license updates and product support grew 3%, to $2 billion.

Author: John Letzing @ www.marketwatch.com

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With economy sluggish, all eyes will turn to Oracle

Investors looking to gauge the effect of the troubled U.S. economy on the technology sector will focus on Oracle Corp.'s second-quarter earnings report, expected after the market's close Wednesday.
Analysts polled by Thomson Financial expect Oracle to post earnings of 27 cents a share for the period ended in November, on $5 billion in revenue.

Many analysts and investors are keen to hear what Oracle has to say about the health of its business now, amid the ongoing credit crunch and troubles stemming from the subprime mortgage crisis.
Business software maker Oracle has numerous customers among the country's largest financial services firms and other corporations. Some have speculated that these firms may scale back their purchases of software and other technologies amid the economic turbulence.

But analysts have made generally positive predictions for Oracle's quarterly results and outlook. Broadpoint Capital analyst Mark Murphy wrote in a note to clients Tuesday that he expects Oracle to beat consensus estimates on second-quarter sales and profit.
"Despite signs of softening macroeconomic demand, we continue to view our [Oracle earnings] forecast as being relatively resilient, due to Oracle's acquisitiveness and its large base of recurring maintenance revenue," Murphy wrote.
Oracle has turned in a string of well-received quarterly reports this year, translating its many recent acquisitions into quickly growing revenue while branching into new and more specialized areas of the business software market.
Shares of Oracle have risen more than 20% in the year-to-date, while U.S.-traded shares of rival business software maker SAP AG have fallen roughly 5%. Oracle shares rose slightly Tuesday, to $20.98.

Oracle's most recent acquisition, of Netherlands-based Moniforce, was announced earlier this month. Performance management software maker Moniforce "has a presence in the retail, federal, and financial sectors," CIBC World Markets analyst Brad Reback wrote in note released to clients.
Though Oracle's sales to financial firms may be slowed by the credit crunch, it should be able to cover its losses in the second quarter with gains in sales in other sectors, Global Equities Research analyst Trip Chowdhry wrote in a note to clients earlier this month.
The "subprime mortgage industry may negatively impact Oracle's business by 2% to 4%," Chowdhry wrote, "however strength in healthcare, packaged goods and hi-tech verticals may offset the above weakness."
Chowdhry said he is expecting a "positive revenue surprise" for Oracle's second-quarter results, and "in-line guidance."
Pacific Crest Securities analyst Brendan Barnicle concurred with Chowdhry's upbeat expectations for the quarter.
"We have been very surprised by the strength of our [second-quarter] Oracle channel checks," Barnicle wrote in a note to clients earlier this month.
Barnicle said he's heard of strength in Oracle's sales to financial services firms, "which we certainly did not expect," as well as strong sales to small and medium-sized businesses, "which has historically been weak."

Author: John Letzing @ www.marketwatch.com

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Calsoft accelerates buy out of Inatech - Strengthens its Oracle practice

Chennai, 17th December 2007: Calsoft today announced the signing of a Memorandum of Understanding (MOU) for acquisition of the minority shareholding of 49% in Inatech Infosolutions, India (Inatech). The consideration for the acquisition of this part is valued at approximately USD 6.17 Million and will be paid through a combination of cash & stocks, subject to due regulatory approvals as applicable.

Earlier in Nov 2006, Calsoft had taken 51% majority interest in Inatech, a specialized end-to-end Oracle solutions provider in the enterprise space. As part of the agreement, Calsoft was to originally acquire the balance in November 2009.

Mr. S. (Sam) Santhosh, Managing Director & CEO, Calsoft, said, “Inatech’s good performance, their management team and European presence have encouraged us to accelerate the buy out. We expect this transaction to be accretive to Calsoft’s earnings. Given the size of our organization and the complementary nature of our businesses, we should recognize substantial revenue synergies and significant economies of scale.”

Inatech has posted consolidated revenues of Rs30.54 crores (US$ 7.5million) and with profits after tax of Rs 3.6 crores (US$0.9 million) for the half-year ended 30 September 2007.

Mr. Vedante Srihari, CEO & Founder of Inatech added, “There is an increasing demand for high quality Systems Integrators who can deliver globally. Now is the time for Inatech to join Calsoft and leverage synergies.”

Moving forward, Mr. Vedante Srihari would head Calsoft’s Enterprise Solutions strategic business unit.

Forward Looking Statements

Some of the statements in this release that are not historical facts are forward-looking statements. These forward-looking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. These risks include, but are not limited to, the level of market demand for our services, the highly-competitive market for the types of services that we offer, market conditions that could cause our customers to reduce their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry.

About Calsoft

California Software Company Ltd (Calsoft) is a public limited company in India with a global presence. Its development practices are certified at CMMi Level 5. Founded in 1992, Calsoft group including subsidiaries currently employs over 1000 professionals. The group has development centers in Chennai, Bangalore and Mysore in India and Pleasanton, (California), Alameda (California), Boston (MA) in the USA. Calsoft group has marketing offices in the US, UK, Singapore, Dubai, Copenhagen and in India. Calsoft is listed in India at NSE (cali.ns) and BSE (cali.bo). For more information on Calsoft visit www.calsoft.co.in

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