Oracle Q3: No Supply Chain Problems Foreseen In Japan

As a software-only company, Oracle relied on few subcontractors, such as manufacturers of components and subsystems. But that changed early last year when Oracle acquired Sun Microsystems, making the company a major player in the server and data storage hardware arena.

Oracle executives made the comments during the company’s fiscal third-quarter earnings call Thursday. For the quarter ended Feb. 28 Oracle reported revenue of $8.76 billion, up 37 percent year-over-year from $6.40 billion in the same period last year. Net income increased 78 percent to $2.12 billion from $1.19 billion one year ago.

"Frankly, we’re just executing on all fronts," said Co-President Mark Hurd in a conference call with financial analysts. "Q3 was a great quarter."

Oracle CEO Larry Ellison, who is usually present for earnings calls, was absent while serving on jury duty.

"We actually don’t expect there to be any supply chain issues for us out of Japan," said Co-President Safra Catz, responding to a question during the earnings call. She added that Oracle's building in Tokyo was undamaged in the quake and all Oracle employees in the country were safe. Oracle has been working with its "suppliers and sub-suppliers" in Japan, Catz said, and "so far everything is fine."

Most IT manufacturers have reported few disruptions in getting parts from manufacturers in Japan, although some manufacturers such as Lenovo, Toshiba and Apple have said delays in obtaining components could raise prices.

Oracle has owned Sun for more than a year now and executives were eager to play up the success of the company’s hardware business. Hardware system sales were $1.04 billion in the third quarter while hardware support generated another $629 million. Hurd also touted the growing demand for Oracle's Exadata database server and Exalogic cloud platform server.

While Catz said it is impossible to calculate exactly how much the former Sun products are contributing to Oracle's bottom line, she said that roughly $1.5 billion of the fiscal 2011 operating profit will come from Sun products.

Hurd said customers of Sun products who may have been concerned about Sun's viability have been reassured as Oracle as put money into the continued development of Sun's Sparc hardware and the Solaris operating system.

But Oracle also had reasons to brag about the performance of its core software business. Sales of new software licenses grew to $2.21 billion during the third quarter, up 29 percent from $1.72 billion one year earlier. Software revenue overall was up 19 percent to $5.95 billion from $5.02 billion one year ago.

New software license sales for applications were especially strong during the quarter, up more than 25 percent to $639 million from $477 million in last year's third quarter. "You can really see the momentum in our apps business as we continue to take market share from SAP," Catz said, getting in a dig at one of Oracle's chief rivals.