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Strong software demand bolsters Oracle performance

Simon Quicke

With the International Monetary Fund warning that the global economy is in a difficult position the temptation to slide into doom and gloom could be overpowering but Oracle has indicated that IT spending is holding up.

The software giant has indicated that its next set of results following its first fiscal quarter ended 31 August are going to be better than some market watchers had expected.

That confidence comes after a decent set of Q1 numbers were unveiled last night with software sales up.  The vendor has indicated that the demand will continue and it expects to deliver a strong performance in its second quarter.

The numbers for Q1 will bring some calm to the IT world following difficult recent results announcements from some of the major hardware players.

Sales in the three months to the end of August increased by 12% to $8.37bn. Net income rose by 36% to $1.84bn but it was the 16% increase in new software license sales that was the clearest indicator that demand remains strong.

Outside of the software side of the business there were mixed fortunes on the hardware side which will accelerate the movement away from the low-end of the market.

"Our high-end server business - Exadata, Exalogic, and SPARC M-Series - delivered solid double digit revenue growth in Q1," said Oracle President, Mark Hurd.

"In contrast, revenue declined in our low-end server business. By moving away from low-margin commodity hardware and focusing on high-end servers, we increased our hardware gross margins from 48% to 54%. Our strategy to grow the profitable parts of our hardware business is paying off," he added.


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