ORACLE PROFIT EXCEEDS WALL STREET'S PREDICTIONS

Oracle Corp, one of the world's largest software companies, on reported a fiscal fourth-quarter operating profit that exceeded Wall Street's predictions on strong sales of its application software programs and by using its own software to become more productive.

For the three months ended May 31, Oracle earned $926 million before onetime items, or 31 cents a share, up from $527 million, or 18 cents a share, in the year-ago period. Analysts polled by earnings tracker First Call/Thomson Financial had expected Oracle to earn 25 cents a share during the quarter.

Including a one-time gain of $6.5 billion from the sale of stock from its Japan subsidiary and $48.4 million in other one-time investment gains, Oracle earned $4.9 billion, or $1.63 a diluted share. Revenue rose to $3.4 billion from $2.9 billion a year earlier. For the full fiscal year, revenue rose to $10.1 billion, up from $8.8 billion a year ago.

While Oracle's earnings rang in above analysts' forecasts, investors sold off the company's shares in extended-hours trading. Shares of Oracle (ORCL: Research, Estimates) fell 4-1/32, or almost 5 percent, to 82 in after-hours activity on significant volume, with almost 3 million shares changing hands. The stock rose 31/32 to 86-1/32 in regular trading before earnings were announced. Its shares are up more than 53 percent this year.

Database Sales Fall Short

"The stock had a great run-up in anticipation of solid earnings, and I think their database revenue was a little shy of what people were looking for -- that's probably why people are selling in after-market (trading)," said Andrew Roskill, an analyst with UBS Warburg. "Overall, though, l think it was a good quarter."

Indeed, Oracle's sales of its database software, programs used by corporations to manage large amounts of data and records, rose a smaller-thanexpected 12 percent, triggering a decline in the company shares in after-hours trading, Roskill said.

Nonetheless, Roskill told CNNfn's Street Sweep that, if anything, the Redwood Shores, Calif.-based company made up for that shortfall by selling more application-related products. What's more, he expects the company will see positive revenue growth in fiscal 2001, something that could help boost its share price in subsequent quarters.

Application software sales, or sales of large-business software that helps run network computer systems, jumped 61 percent to $447 million in the fiscal fourth quarter, Oracle said. Revenue from consulting, education and support rose 7 percent to $1.5 billion.

Benefiting from Productivity

The company also said it benefited by using its own software to boost productivity, achieving savings of more than $1 billion for the entire fiscal year.

"One year ago Oracle set out to save $1 billion annually by using our own Internet e-business applications. We did that, and more," said Oracle Chief Financial Officer Jeff Henley. "As we enter the second year of our e-business transformation, we are beginning to benefit from the sales and marketing productivity gains that will accelerate revenue growth through 2001."

Henley said that sales for its fiscal first quarter, which will end on Aug. 31, will be slower than the fourth quarter. However, that's normal, given that the software maker pushes to finalize its sales before its fiscal year ends, analysts said. At the same time, Henley said he expects sales will ring in better than analysts' are currently forecasting.

"We have an enormous sales pipeline for both applications and technology," Henley said in a conference call after the company's earnings were released to the public. "Typically that's proven to be a good indicator of how we'll do."