Oracle profit rises 28%; FedEx slips

Oracle Corp. said Thursday that its fiscal first-quarter profit jumped 28 percent, beating Wall Street's expectations, as software sales stayed steady despite turmoil in the U.S. economy.

The business software company's net income for the three months ended Aug. 31 rose to $1.08 billion, or 21 cents per share, from $840 million, or 16 cents per share, a year ago.

Excluding expenses for employee stock options and acquisitions, Oracle posted earnings of 29 cents per share, 2 cents better than analysts had expected, according to a Thomson Reuters poll.

Revenue increased 18 percent, to $5.33 billion.

Oracle forecast adjusted earnings per share of 35 to 36 cents per share in the current quarter. Analysts were expecting 35 cents per share.

Oracle shares gained 65 cents, or 3.6 percent, to $18.75.

FedEx Corp.: The package-delivery company said its fiscal first-quarter earnings fell 22 percent but still matched Wall Street expectations, as cost cuts partially offset slowing global growth.

The company also predicted it will beat analysts' expectations for its fiscal second quarter, and said it will hike shipping rates at its Express unit starting next year.

FedEx earned $384 million, or $1.23 per share, in the three months ended Aug. 31, compared with $494 million, or $1.58 per share, a year earlier.

Revenue rose 8 percent, to $9.97 billion.

The results reflect a shift away from more-expensive overnight shipping. The drop in such deliveries at FedEx, considered a proxy for the economy, may be an "ominous" sign for U.S. growth prospects, said Dan Ortwerth, an Edward Jones & Co. analyst in St. Louis.

"It's quashed any hopes that people have that we're going to emerge from the current period of weakness sooner rather than later," Ortwerth said.

Overall, the company is mitigating the weak U.S. economy and slowing international growth "pretty well" while maintaining strong customer service, said Stifel Nicolaus analyst David Ross. That includes a planned update of its Boeing fleet to further cut fuel consumption.

For the fiscal second quarter, FedEx expects to earn $1.40 to $1.60 per share, well above Wall Street's average forecast of $1.35 per share for the period. It made $1.54 a share in the year-ago quarter.

FedEx shares rose $3.06, or 3.5 percent, to $91.13.

ConAgra Foods Inc.: The packaged-foods company said fiscal first-quarter profit more than doubled on the sale of its commodity trading unit, but rising costs hurt results and drove the company to lower its outlook for its fiscal year.

The maker of Hunts, Healthy Choice and other brands earned $442.4 million, or 94 cents per share, in the quarter ended Aug. 24, up from $175.4 million, or 36 cents per share, a year ago. That includes a gain of 71 cents per share for selling its trading and merchandising operations.

Earnings from continuing operations totaled 23 cents per share, a penny below Wall Street expectations.

Revenue rose 17 percent, to $3.07 billion.

Chief Executive Gary Rodkin said the company expects stronger profit in the second half of the year because of the recent price increases, cost cutting, new products and an expected moderation of rising commodity costs. He said ConAgra plans to launch a new line of shelf-stable Healthy Choice meals in the coming months.

Citigroup analyst David Driscoll said in a research note that many food companies have benefited because consumers are eating less at restaurants and getting more of their food at grocery stores.

"This has resulted in improved results across the sector," Driscoll wrote. "ConAgra has clearly lagged these improvements but ultimately should benefit as the others have."

Shares advanced 52 cents, or 2.7 percent, to $19.69.

Source: www.chicagotribune.com

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Oracle New Product Sales May Be Hurt by Dollar, Slump in Europe

Oracle Corp., the software maker whose international orders buoyed revenue this year, may report smaller growth in sales of new programs after the U.S. dollar advanced and European clients curbed spending.

Sales of software licenses probably came in at the low end of Oracle's goal of $1.2 billion to $1.3 billion in the first quarter ended Aug. 31, six analysts interviewed by Bloomberg said. The increase could be as little as 10 percent, two-thirds less than the year-earlier gain.

Companies abroad are joining U.S. customers in cutting budgets to cope with an economic slowdown, removing a shield that Chief Executive Officer Larry Ellison used to protect Oracle's results in the past. More than half of Oracle's total revenue comes from overseas, and those sales rose almost twice as fast as sales at home during the fiscal fourth quarter.

``Europe is in the tank,'' said Jeff Markunas, who helps manage $1.2 billion as portfolio manager for RidgeWorth Large Cap Core Equity Fund, which owns 900,000 shares of Oracle, in Richmond, Virginia. ``Companies there are beginning to trim discretionary spending.''

The dollar has gained as economies from Europe to Japan cooled and crude oil dropped more than 30 percent from its peak of $147.27 a barrel. The U.S. currency has risen 11 percent from its record low of $1.6038 per euro July 15.

Oracle, the second-biggest software maker after Microsoft Corp., had forecast that converting the euro and other currencies to the dollar would boost revenue by 5 basis points, or 0.05 percentage point.

Dollar Gains

Instead, the dollar's increase means the lift probably will be 2.5 basis points, said UBS AG's Heather Bellini in New York, ranked as the top software analyst by Institutional Investor magazine. She projects as much as $1.23 billion in new license sales, a barometer for future revenue from upgrades and maintenance fees.

Redwood City, California-based Oracle plans to report earnings today after the markets close. Total revenue probably gained 19 percent to $5.45 billion, based on the average estimate of 19 analysts surveyed by Bloomberg. Profit excluding buyout and stock-option costs probably rose to 27 cents a share.

Oracle spokeswoman Deborah Hellinger didn't return a phone call and an e-mail seeking comment.

Oracle fell 86 cents to $18.10, an 18-month low, in Nasdaq Stock Market trading yesterday. The shares have lost 20 percent this year, compared with a 25 percent drop for the Standard & Poor's 500 Information Technology Index.
`Weaker End'

Almost half of large companies worldwide cut their technology budgets for the next 12 months, Forrester Research Inc. said in a report published this month.

``It was a weaker end to the quarter than people had anticipated,'' said Brendan Barnicle, an analyst with Pacific Crest Securities Inc. in Portland, Oregon.

License sales advanced 35 percent in the year-earlier quarter, boosted mostly by Ellison's $34.5 billion in acquisitions, Barnicle said. Typical growth rates for big technology companies are less than 20 percent, and Oracle will return to that pace, he said.

Ellison's 44-company buyout spree almost doubled revenue and pushed Oracle beyond database software. The company now sells programs to run tasks from human resources to analyzing internal operations, manufacturing and merchandising. The purchases helped Oracle overtake International Business Machines Corp. last quarter as the second-biggest software maker.

The company's variety of products still may guard Oracle from a sinking economy in the long run, Goldman, Sachs & Co. analyst Sarah Friar said in an interview from San Francisco.

``Customers are working with fewer vendors, and that's helping Oracle because they have so much they can sell,'' Friar said. ``Software spending is stronger than technology overall, and Oracle spending is stronger than software.''

To contact the reporter on this story: Rochelle Garner in San Francisco at rgarner4@bloomberg.net

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Microsoft takes on Oracle

MICROSOFT WILL REPORTEDLY begin adapting SQL servers to support hundreds of terabytes of data.

The server extensions are based on technology acquired from Datallegro, a developer of large-volume data warehouse appliances. According to the Vole, Datallegro's products will allow it to surpass Oracle's capabilities and compete with other high-end enterprise data warehousing solutions.

The Redmond giant plans to initially offer community technology previews and expects to begin distribution of a commercial version by the first half of 2010. Microsoft will also retain the majority of Datallegro's staff at its headquarters in Aliso Viejo, California.

The Datallegro v3 warehouse appliance is currently priced at under $500,000 for 12 terabytes and includes hardware, rack, networking and a 15TB capacity backup server. The unit, which is capable scanning data at up to 10.5TB/minute, utilises EMC storage, Dell servers, Cisco Infiniband switches, Intel multi-core CPUs and the Ingres Open Source database.

Author: Aharon Etengoff @ www.theinquirer.net

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