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Oracle Claims Victory Over EC; Says Sun Will Sell Clouds

Ellison reckons the Exadata-style business is the future of computing and worth billions of dollars

Oracle Keynote at Cloud Expo

Cloud Computing Expo - Oracle expects the European Commission to wave its acquisition of Sun through next month MySQL and all without any annoying conditions.

Oracle president Safra Catz, who’s been wrestling with the EC, said so when the company posted its fiscal second-quarter results Thursday, another reason Oracle’s going to have a Merry Christmas.

Catz took a bunch of Oracle users to an EC hearing a week ago to buttress the company’s claims that the EC had put words in users’ mouths to support the theory of harm it manufactured to try to stop Oracle from getting MySQL.

Oracle Named Exclusive Diamond Sponsor of Cloud Expo 2010

The meeting was backed by a write-in campaign from hundreds of users as well as a letter from the US Senate and a public statement from the Justice Department.

A grateful Catz said, “I want to thank all of our customers for the overwhelming support they have given us during this process.”

After further discussions with the agency over the weekend Oracle Monday made a few relatively non-restrictive promises regarding MySQL so the EC could leave the stage with its dignity intact. It still has until January 27. It will be curious to see it takes that long.

Oracle’s CEO Larry Ellison, who blamed the EC’s foot-dragging for Sun losing $100 million a month to rivals said he expects “Sun to rapidly improve both its market share and margins once this merger closes,” claiming that “Sun’s new Sparc Solaris system and Sun’s new Exadata database machine both run the Oracle database faster than IBM’s fastest computer.”

Ellison reckons the Exadata-style business is the future of computing and worth billions of dollars.

During a conference call Ellison said Sun had no talent for selling high-volume, low-margin x86 machines and would leave that business to Dell and HP. Instead it will focus on the high-performance end peddling SMP machines and private clouds based on both Sun Solaris operating system and Oracle’s Unbreakable Linux and complete with integrated storage and networking.

Oracle’s Q2 beat the Street and the numbers hint that enterprise spending might be coming back into fashion again.

Oracle earned $1.46 billion, or 29 cents a share, up 15%, on revenues up 4% to $5.9 billion, pushing past the $5.69 billion expected. On a non-GAAP basis it realized 39 cents a share, three cents better than expected.

New software license revenues were up 2% to $1.7 billion, versus the $1.54 billion expected. Software updates and support revenues were up 14% to $3.2 billion.

The company’s operating income was up 10% to $2.2 billion and operating margin was up 200 basis points to 37%. Operating cash flow on a trailing 12-month basis was $8.7 billion, up 7%.

In a prepared statement, CFO Jeff Epstein said, “We delivered results which were substantially better than we expected on both the top and bottom line, growing non-GAAP operating margins by 280 basis points to 49%, the highest Q2 non-GAAP operating margin in our history.”

Oracle claimed it took market share from SAP in every region around the world for the fourth consecutive quarter. President Charles Phillips said that in constant currency, “our applications business grew 1% in the Americas and 2% in Asia Pacific versus a negative 35% and negative 34% respectively for SAP.”

Catz said Sun, for all its losses, is still expected to bring Oracle $1.5 billion in operating income. Leaving Sun out – Oracle will redo its predictions next month – she forecast software license revenues to grow this quarter somewhere between minus 1% to up 9% and revenue to be up 3%-6% with non-GAAP ESP of 36 cents-38 cents

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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