Two of the company’s key targets were even worse: total sales fell 22% in Japan, while application sales fell 49% in America. Once a database vendor, Oracle is trying to become a total eBusiness solutions provider with its 11i suite. Despite terrible 2002 figures, the company still stands a good chance of achieving this in the medium term.
Software giant Oracle has announced a 13% fall in fiscal Q3 net income.
US database software vendor Oracle has announced a 13% year-on-year fall in net income of $508 million for Q3 (the quarter to February 28), while revenues fell 17% to $2.2 billion. A major part of the poor performance was down to a 22% fall in sales in Japan and the rest of the Asia-Pacific market, which makes up 12-14% of Oracle’s revenues.
The warning follows terrible Q2 results: revenue fell by 11% and net income by 12% compared with the previous year. Both then and now, Oracle was hit particularly hard by falling software license sales. These were down 27% year-on-year in Q3, compared with a 20% fall in Q2. Only a growth in support spending and license renewals stopped the overall figures from being far worse.
Oracle’s software operations can be divided into database systems or platforms, and applications for specific functions including CRM and supply chain management. For many years, it has been trying to become a total ‘eBusiness solution provider’, increasing its presence in the application space – but application sales fared worst of all in Q3, falling 49% in the Americas.
Things may improve in applications: Oracle’s web-based 11i modular application suite, which has now been on the market for two years, is finally attracting serious interest from large numbers of Oracle’s database customers. This shift has come about at least partly because in the depths of the downturn, Oracle has abandoned its previous refusal to integrate its applications with other vendors’ software.
This willingness to change strategy is one of Oracle’s major strengths. Considering this alongside its enormous installed base in the database market, and its global sales presence (particularly outside the US and Europe), the company does have advantages over many of its rivals.
In short, things are bad for Oracle right now – and may appear worse in Q4, because Q4 2001 was the company’s best ever quarter. But after mid-2002, Oracle’s position should start to recover.