ORACLE CORP Quarterly Report for Q1 Ended Aug 31, 2009

Summary

Oracle Corporation's Form 10-Q for the period ending August 31, 2009, highlights a period of revenue contraction offset by improved operating efficiency. Total revenues decreased by 5% year-over-year to $5.05 billion, primarily driven by a 14% decline in new software license revenues, even on a constant currency basis. However, software license updates and product support revenue saw a modest increase of 6% (11% constant currency), indicating strong customer retention. Total operating expenses decreased by 13% (9% constant currency), leading to a significant increase in operating income by 14% to $1.74 billion and a higher operating margin of 34%. The company also saw a substantial increase in cash and cash equivalents, bolstered by a $4.5 billion senior note issuance. The proposed $7.4 billion acquisition of Sun Microsystems remained a key strategic focus, pending regulatory approval.

Key Highlights

• 1Total revenues declined 5% to $5.05 billion, with new software license revenue down 17% (14% constant currency).
• 2Software license updates and product support revenue increased 6% to $3.12 billion (11% constant currency), showcasing strong customer retention.
• 3Operating expenses decreased by 13% to $3.31 billion, leading to a 14% increase in operating income to $1.74 billion and a higher operating margin of 34%.
• 4The company issued $4.5 billion in senior notes in July 2009, contributing to a significant increase in cash and cash equivalents to $16.1 billion.
• 5Cash flow from operations improved by 15% to $3.74 billion.
• 6The proposed acquisition of Sun Microsystems for approximately $7.4 billion was a key strategic development, awaiting regulatory clearance.
• 7Earnings per share (diluted) remained steady at $0.22 for both periods, indicating effective cost management despite revenue pressures.

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