First-quarter profit soars for Oracle

The world's third largest software developer Oracle is smiling cheek to cheek this month as it reported to have gained higher profit for this year's quarter compared to last year's. And just as many people in the industry have been speculating, the increase in profit has been boosted by the company's acquisition of other products. The results of the of the financial conference call was broadcast live at 2:00 p.m. (PDT) / 5:00 p.m. (EDT).

Oracle, whose specialization in software application is in business solution, reported that during this fiscal first quarter year, it has gained about $840 million which translates into 16 cents per share. In comparison, it only gained $670 million or 13 cents last year during the same period. Its revenue soared from $3.59 billion to $4.53 billion.

According to Safra Catz, Oracle President and CFO: “We reported new software license revenues up 35%, the strongest growth of any quarter in ten years. Software sales growth is translating nicely into EPS growth. We’ve now completed thirteen quarters of our five year EPS growth plan of 20% per year, and we are delivering earnings growth well ahead of that target."

Says an elated Oracle President Charles Phillips:

“We continue to take applications market share from SAP. In Q1 Oracle’s applications new license sales grew 65% compared to SAP’s new license sales growth rate of 18% in their most recently completed quarter. We like our growth strategy of expanding into high-end industry specific vertical software as opposed to SAP’s growth strategy of moving down market to sell software to small companies.

"Our Q1 database and middleware new license sales growth rate of 23% was the
highest in seven years. Oracle passed IBM to become the number one database company a long time ago. If we continue to grow our middleware software business at the same rate we grew it this quarter, Oracle will challenge IBM for the number one position in middleware by the end of this year.” quipped CEO, Larry Ellison.

This year's higher earning has been greatly buoyed up the sale of some products which were in the Oracle roster last year. These added products came from Hyperion Solutions, Stellent, MetaSolv and several other software solutions vendors.
Oracle now trades at about 16 times compared to the average outlook for the earnings per share of next year. This is slightly about Microsoft's 16 future price-to-earnings ratio.

Meanwhile, IBM, a technology services company and the number 2 software maker trades at 15 time earning. In terms of database technology, Oracle is still the leader ahead of IMB. In terms of business applications solution, Oracle ranks number 2 just behind Germany's SAP AG. Sap currently trades at 22 times estimated 2008 earnings. Oracle and SAP have been in constant tight competition for top spot in term so enterprise resource planning (ERP) software applications.
Oracle is the world’s largest enterprise software company and innovative solutions for virtually kinds of industries.

The Oracle Fusion

When Oracle Corporation has announced that it will release a new suite of ERP related applications dubbed as Fusion, the news greatly clarified the vision of Oracle for its applications strategies which has been a point of concern in relation to customers of PeopleSoft, which Oracle bought for $10 billion. Fusion was expected to serve as a point of migration for customers all the three Oracle platforms.

Oracle Fusion is a middleware. It is portfolio of standards bases software application products. Oracle Fusion spans many services which include J2EE and developer tools, integration services, business intelligence, collaboration, and content management. But lot of the products which are being marketed under the Fusion Middleware banner are not really middleware products themselves. Fusion is just some sort of re-branding move for many products of Oracle outside of their core database and applications software offerings.

Another intended use of Oracle Fusion is to support the development, deployment, and management of Service-Oriented Architecture. This middleware can easily leverage existing software investments such as from IBM, Microsoft and SAP (All of them are Oracle's competitors in ERP), through a pluggable architecture.

Oracle Fusion is a Java-based, service-oriented architecture that has an automated upgrade process from PeopleSoft, Oracle and J.D. Edwards applications. The Oracle Fusion Architecture can provide a robust, very high performance and highly available computing environment. With all these factors that the Oracle Fusion can deliver, a business can have a rich catalog of standard business processes in a wide range of areas such as CRM, ERP, and supply chain management. Evolution is something that cannot be avoided in business as nobody would want to set up a business without having to grow. With Oracle fusion, a company can have a dynamic business process portfolio that can evolve with the company.

Oracle has been careful in defining the line between Oracle and PeopleSoft as both could be though of as one but they need separate marketing image as well. While working on the Fusion, Oracle has made sure it maintained some separation between its Oracle and PeopleSoft development teams.

Oracle Fusion will surely be a great challenge to Oracle's nearest rival in the ERP industry – SAP AG. Oracle has seen Fusion as a revitalizing factor in its aggressive pursuing of leadership in the business applications market. The applications market has a wide array of areas for software solution development including software solutions used for managing corporate functions like sales, human resources and supplier relationships.

As a watcher of competitions among these software giants, I get excited everyday with new developments. SAP is now aggressively marketing its SAP xApps, a range of software products targeted at specific industries and have smaller footprints compared to other ERP implementations. Examples of the xApps include SAP xApp Cost and Quotation Management (SAP xCQM), SAP xApp Manufacturing Integration and Intelligence (SAP xMII), SAP xApp Resource and Portfolio Management (SAP xRPM), SAP xApp Integrated Exploration and Production (SAP xIEP). Despite the develop of a variety of business solutions, the development of software solutions to "Fuse" these things together is always catching up.