US customers are once again spending money on technology

New York : Oracle Corporation, the world's second-largest software maker, rose as much as 3.3 per cent in Frankfurt trading after topping profit estimates and saying that US customers are once again spending on technology.

"We are definitely seeing customers back buying," Oracle President Safra Catz said on a conference call. "No giant deals of any sort, but lots of very nice-size transactions for every size of company. We are really seeing a recovery."

Second-quarter net income rose 13 per cent to $1.46 billion (Dh5.36 billion), or 29 cents a share, from $1.3 billion, or 25 cents, a year earlier, Oracle said. Excluding some costs, profit was 39 cents in the period, which ended November 30. Analysts in a Bloomberg survey estimated 36 cents on average.

Companies across industries, including financial services, communications and retail, have resumed spending — a trend that is continuing this quarter, Oracle said. The company is also benefiting from a five-year, $42 billion acquisition spree, which boosted demand for Oracle's software-support contracts.

"Oracle clearly saw a return to a better spending environment," said Sarah Friar, an analyst with Goldman Sachs Group Incorporated in San Francisco. She recommends buying the shares, which she doesn't own. "We're definitely seeing an enterprise tech spending rebound in the US."

Shares Advance

Oracle, based in Redwood City, California, rose as much as 52 cents to 16.53 euros in Frankfurt and traded at 16.50 euros as of 11.18 am The stock has climbed 36 per cent this year.

Excluding some costs, profit will be 36 cents to 38 cents a share this quarter, Oracle said. That compares with a 36-cent average estimate among analysts. Sales will grow 3 per cent to 6 per cent in the period, indicating revenue of as much as $5.8 billion. Analysts had projected $5.71 billion.

Including revenue from acquired companies, sales rose 3.3 per cent to $5.87 billion last quarter, topping the estimate of $5.7 billion.

Oracle said some of that gain came at the expense of SAP AG, its larger rival in the market for business-management software.

"We grew faster than SAP in every region around the world, clearly taking market share, as they have essentially come apart at the seams," Catz said on the call.

Guenter Gaugler, a spokesman for Walldorf, Germany-based SAP, declined to comment via telephone today.

Oracle also discussed its proposed $7.4 billion acquisition of Sun Microsystems Incorporated, the fourth-largest maker of server computers.

That deal, announced in April, has been delayed by a European antitrust review. The company expects a "full and unconditional clearance" from the European Commission in January, Catz said.

Chief Executive Officer Larry Ellison said Oracle won't pursue Sun's low-margin, high-volume server business.

The company will cede that market to the current leaders, International Business Machines Corporation, Hewlett-Packard Company and Dell Incorporated, he said.