10-KPeriod: FY2009

ORACLE CORP Annual Report, Year Ended May 31, 2009

Filed June 29, 2009For Securities:ORCLORCL-PD

Summary

Oracle Corporation's 2009 10-K filing details a company in a strong financial position, leveraging its dominant role in the enterprise software market. The report highlights Oracle's dual strategy of organic growth through continuous innovation and strategic acquisitions to expand its product portfolio and market reach. Despite the challenging economic environment of 2009, the company demonstrated resilience, with total revenues growing year-over-year. A significant event discussed is the pending acquisition of Sun Microsystems, indicating Oracle's aggressive growth strategy and commitment to consolidating its market leadership. The company emphasizes its recurring revenue streams from software license updates and product support, which contribute significantly to its high margins and stable cash flows.

Financial Highlights

54 data points
Beta

Revenue

$23.25B

100.0% Gross Margin

Net Income

$5.59B

24.1% Net Margin

EPS (Diluted)

$1.09

Total Assets

$47.42B

Cash & Equivalents

$8.99B

Free Cash Flow

$8.26B

Financial Statements
Beta
Revenue$23.25B
Cost of Revenue$0
Gross Profit$23.25B
R&D Expenses$2.77B
Operating Expenses$14.93B
Operating Income$8.32B
Interest Expense$630.00M
Net Income$5.59B
EPS (Basic)$1.10
EPS (Diluted)$1.09
Shares Outstanding (Basic)5.07B
Shares Outstanding (Diluted)5.13B

Key Highlights

  • 1Oracle is the world's largest enterprise software company, focused on database, middleware, and applications software.
  • 2The company pursues a dual strategy of organic growth through R&D investment ($2.8 billion in FY2009) and strategic acquisitions.
  • 3A significant event is the announced Agreement and Plan of Merger with Sun Microsystems, Inc. for approximately $7.4 billion.
  • 4Software license updates and product support represent a substantial portion of revenue (50% in FY2009) and are characterized by high margins.
  • 5The company experienced a revenue increase in FY2009, driven by software updates/support and acquisitions, despite a 6% negative impact from currency fluctuations.
  • 6Oracle's services business (consulting, On Demand, education) represents 19% of total revenues and has lower margins compared to the software business.
  • 7The company initiated its first quarterly cash dividend in FY2009, signaling a commitment to returning value to shareholders.

Frequently Asked Questions

Oracle's core strategy involves a combination of internal innovation through substantial investment in research and development and an active acquisition program to acquire complementary technologies, products, and companies. The goal is to maintain and expand its leadership in enterprise software, offering integrated solutions to customers and enhancing shareholder value.

Oracle's primary revenue drivers are its software products, specifically new software licenses and software license updates and product support. The 'software license updates and product support' segment is particularly important, accounting for a significant portion of revenue (50% in FY2009) and generating high margins, providing a stable and recurring revenue stream. The services segment, including consulting, On Demand, and education, contributes a smaller but significant portion of revenue.

The acquisition of Sun Microsystems, valued at approximately $7.4 billion, is a major strategic move. It is expected to strengthen Oracle's competitive position, expand its customer base, accelerate innovation by integrating Sun's technologies (such as Java and Solaris), and grow Oracle's revenues and earnings. This acquisition aligns with Oracle's strategy of consolidating market leadership and achieving greater scale.

Oracle maintains a strong liquidity position, with significant cash, cash equivalents, and marketable securities. The company actively repurchases its shares and, in fiscal year 2009, initiated its first quarterly cash dividend. Oracle also manages its debt levels, with substantial borrowings to fund acquisitions and operations, and plans to use its strong cash flow, existing debt capacity, and potential for further debt or equity issuance to fund future growth and acquisitions, including the Sun Microsystems deal.