San Francisco : Oracle, the world's second-largest software maker, forecast the fastest sales growth for new software licences since mid-2008, fresh evidence that the US economy is bouncing back from the recession.
Sales of new software licences will increase between 3 per cent and 13 per cent, to $2.83 billion (Dh10.40 billion) to $3.1 billion, the company told analysts on Friday on a conference call. Licence revenue is an indicator of future growth since most Oracle customers eventually buy maintenance contracts. For every $1 in new licences, Oracle gets about $2 in support fees.
The forecast suggests an economic recovery is under way, said Sarah Friar, an analyst with Goldman Sachs in San Francisco. Oracle is the second major software company last week to forecast a pickup in sales. Adobe Systems said it expects sales to jump in the current quarter, when it unveils the next version of its most profitable applications.
"Oracle's results keep us bullish on software," Friar said in an interview. "Software spending does best when the GDP recovers. It doesn't anticipate the recovery — it happens at the same time. This tells me we are right in the middle of it."
Chief Executive Officer Larry Ellison, 65, has spent $41.8 billion buying 62 companies since January 2005. That's let Oracle add customers and products, including business applications and tools that make disparate pieces of software work together. Licence sales rose 13 per cent as companies renewed spending.
"Those licence numbers tell you things are looking up in the enterprise space," said David Rudow, a Minneapolis-based analyst with Thrivent Asset Management, which holds more than 3.7 million Oracle shares for clients.
