10-KPeriod: FY2008

ORACLE CORP Annual Report, Year Ended May 31, 2008

Filed July 2, 2008For Securities:ORCLORCL-PD

Summary

Oracle Corporation's 2008 Form 10-K report highlights a year of significant growth driven by both organic innovation and strategic acquisitions. The company continued its aggressive acquisition strategy, investing $9.4 billion in fiscal year 2008, most notably with the purchase of BEA Systems. This expansion aims to solidify Oracle's position as the world's largest enterprise software company by broadening its product portfolio in database, middleware, and applications. Financially, Oracle demonstrated robust performance with increasing revenues and operating income. The software business, comprising new licenses and support/updates, remained the primary revenue driver, supported by a strong and recurring revenue stream from product support. The services segment also saw growth, though it contributes a smaller portion of overall revenue and operates at lower margins. Oracle's strong cash flow generation and significant cash reserves provide a solid foundation for continued investment in research and development, ongoing acquisitions, and shareholder returns through stock repurchases.

Financial Highlights

32 data points
Beta

Revenue

$22.43B

100.0% Gross Margin

Net Income

$5.58B

24.9% Net Margin

EPS (Diluted)

$1.06

Cash & Equivalents

$8.26B

Free Cash Flow

$7.40B

Financial Statements
Beta
Revenue$22.43B
Cost of Revenue$0
Gross Profit$22.43B
Operating Expenses$14.59B
Operating Income$7.84B
Interest Expense-$394.00M
Net Income$5.58B
EPS (Basic)$1.08
EPS (Diluted)$1.06
Shares Outstanding (Basic)5.13B
Shares Outstanding (Diluted)5.23B

Key Highlights

  • 1Significant investment in Research and Development: Oracle invested $2.7 billion in R&D to enhance existing products and develop new ones.
  • 2Aggressive Acquisition Strategy: The company invested $9.4 billion in acquisitions during fiscal year 2008, including the major acquisition of BEA Systems.
  • 3Strong Revenue Growth: Total revenues increased significantly, driven by both organic growth and contributions from recent acquisitions.
  • 4Dominant Software Business: The software segment (new licenses and support/updates) accounted for approximately 80% of total revenues, with software license updates and product support being a high-margin, recurring revenue stream.
  • 5Expanding Global Presence: Oracle continues to derive a substantial portion of its revenues and operations from international markets.
  • 6Robust Financial Position: The company maintained strong cash flow generation, significant cash and marketable securities, and a healthy balance sheet, supporting further investment and operational flexibility.
  • 7Active Share Repurchase Program: Oracle continued its program to repurchase shares of its common stock, balancing potential dilution from equity compensation.

Frequently Asked Questions

Oracle's growth in fiscal year 2008 was primarily driven by a combination of robust organic growth across its software segments (database, middleware, and applications) and a significant strategic acquisition program, notably the acquisition of BEA Systems for $9.4 billion. These acquisitions expanded Oracle's product portfolio and market reach.

Acquisitions significantly impacted Oracle's financial statements by contributing to revenue growth and increasing goodwill and intangible assets. The company also incurred integration costs and amortization expenses related to these acquisitions. Notably, acquired support obligations were adjusted to fair value, impacting the recognition of future revenue from these contracts.

Oracle views R&D as critical to maintaining its competitive position. In fiscal year 2008, the company invested $2.7 billion in R&D to enhance its existing product offerings and develop new solutions, reflecting a commitment to continuous innovation in its core database, middleware, and applications technologies.

Oracle competes in a highly fragmented and rapidly evolving market. Its strategy includes focusing on lowering the total cost of ownership for customers through integrated 'software stacks,' enhancing product functionality and performance, and leveraging its aggressive acquisition strategy to acquire complementary technologies and expand market share. The company also faces competition from open-source alternatives and the growing Software-as-a-Service (SaaS) model.