Oracle Reports 15 Percent Increase In ProfitsOracle Reports 15 Percent Increase In Profits

Oracle Corp. on Tuesday said strong sales of its database contributed to a 15 percent increase in profit for the fourth quarter.

The Redwood Shores, Calif.-based, company said net income for the fiscal quarter rose to $990 million, or 19 cents a share, from $858 million, or 16 cents a share, during the same period a year ago. Revenues increased 9 percent to $3.1 billion.

Sales of Oracle's database and business software were up 12 percent from a year ago to $2.5 billion, while services revenue dropped 4 percent to $558 million.

Operating income was $1.4 billion for the quarter and $3.9 billion for the year, which surpassed the company's performance during the Internet bubble of the late '90s, Jeff Henley, Oracle chairman and chief financial officer, said in a statement. “We had a very strong finish to a very good year.”

Chief executive Larry Ellison said new license sales for the Oracle database increased at a rate of 15 percent, since the company introduced grid technology six months ago. In addition, the company's new Oracle 10g database was off to a “fast start,” Ellison said.

Grid computing refers to connecting groups, called clusters, of low-cost computers, so they can collectively perform business activities that demand a lot of processing power. Oracle appears to be benefiting from its focus on Linux, an open source operating system, as a platform for its database and grid technology, Colleen Graham, analyst for market researcher Gartner Inc., said.

“We're seeing Linux taking off as a database platform, and Oracle has positioned itself as offering the Linux database of choice,” Graham said.

The Linux database market is expected to have a compound annual growth rate of 47 percent through 2008, when it's expected to reach $2 billion, according to Gartner. The market in 2003 was $300 million.

For the full fiscal year, Oracle's net income rose 16 percent to $2.7 billion, or 50 cents a share. Total revenues were up 7 percent to $10.2 billion, with software revenue up 12 percent to $8.1 billion and services revenue down 8 percent to $2.1 billion. The operating margin for the year was a company record 38 percent.