Oracle's net profits dip, revenue rises

update Oracle reported a mixed third-quarter performance, with net profits dropping and revenue rising.

The maker of business software reported a net profit of $540 million, or 10 cents a share, compared with $635 million, or 12 cents a share, a year ago.

The company's net income, based on non-GAAP, or non-generally accepted accounting principles, was $814 million, or 16 cents a share. Wall Street, which based its estimates on non-GAAP figures, had expected the company to post earnings of 15 cents a share, according to Thomson Financial.

Revenue for the quarter rose to $2.95 billion, up 18 percent compared with the previous year. Meanwhile, non-GAAP revenue was $3.09 billion. Analysts had expected the company to generate revenue of $3.08 billion, according to Thomson Financial.

Revenue from total software licenses rose to $2.34 billion, up 15 percent from the previous year. And revenue from Oracle's services business jumped to $614 million, a 26 percent increase over year-ago figures.

New database license revenue rose to $782 million for the quarter, up 12 percent from the previous year.

Oracle, which completed its PeopleSoft acquisition earlier this year, found that its former rival helped bolster applications revenue by 9 percent. But excluding the PeopleSoft revenue, Oracle's applications business fell 13 percent, said Safra Catz, Oracle co-president and interim chief financial officer.

"We had anticipated this quarter was going to be a transition quarter," Catz said during a conference call with analysts. "We believe a lot of the work is behind us and expect to see improvement in the fourth quarter."

She noted that much of the merger work is finished and that Oracle is expecting to be "substantially completed" with the integration in the next six months.

Larry Ellison, chief executive, echoed that assessment, further adding that the transition did not hurt the company's database and applications server businesses, which both improved over last year.

"Oracle's database business is growing faster than the industry as a whole," Ellison said. "We now have 41 percent of the global market....IBM...declined to 30.6 percent. We're gaining and taking market share from IBM."