January 21, 2003 6:34 PM PST

Oracle expects application sales to grow

Oracle expects to grow its languishing business applications division in the third quarter, following a recent decline in sales.

Jeff Henley, the company's chief financial officer, predicted that sales of Oracle Business Applications will rise in the fiscal third quarter, ending in February, compared with a year earlier. Henley made his remarks to a group of securities analysts at the company's annual AppsWorld conference in San Diego on Tuesday.

Oracle's applications sales plummeted in the second quarter, ended in November. New license revenue from business applications worldwide fell 34 percent in year-over-year to $108.1 million. In the company's Americas sales region, that figure fell 50 percent year-over-year to $51.5 million.

By contrast, the Redwood Shores, Calif.-based company's database business improved in the second quarter. New license revenue from database technology grew 5 percent worldwide to $643.4 million.

For the past two years, Oracle has struggled to grow its application business, which executives there have long touted as an important source of future growth for the company. While license sales at Oracle competitors SAP, PeopleSoft and Siebel Systems have also stagnated, the decline of Oracle business has been steeper.

Oracle's applications package includes software to help companies move many of their processes, from bookkeeping and inventory to human resources and marketing, to a digital format.

White House official Mark Forman on Monday used AppsWorld to announce President Bush's proposal to increase technology spending by 12.3 percent in 2004. Neither Forman nor Oracle made clear what portion of the proposed $59.1 billion federal IT budget would be earmarked for Oracle products. But Oracle's long history of supplying database software to the government and Forman's appearance at the conference seemed to signal that the company stands to gain from the windfall in government spending.

In a keynote speech Tuesday, Oracle Chief Executive Larry Ellison pitched the company's outsourcing services as a way to reduce IT costs. The company also said it has expanded its outsourcing services to include disaster recovery.

Oracle also said its outsourcing group plans to coordinate more closely with other companies that provide software and hosting services to its customers. Finally, the company announced a new program to help customers calculate the full cost of using Oracle Outsourcing to buy, set up and maintain its applications.

Meanwhile, NetLedger, an Oracle software partner and maker of the Oracle Small Business Suite, announced a new set of sales, customer service and marketing application features for its hosted business systems service.

 

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