There wasn’t anything wrong with the earnings results that Oracle (ORCL) announced yesterday. For the company’s fiscal third quarter, which ended in February, revenue climbed to $6.5 billion, up 18% from the third quarter of fiscal 2009. (Excluding currency effects revenue was up 12%.) Earnings climbed to 36 cents a share, up 6% year-to-year. Pretty good given the losses posted by the Sun Microsystems business that Oracle acquired in January.
But still the big excitement was the good news about the U.S. economy in the company’s results.
Sales of software applications in Oracle’s Americas market unit climbed 26% year over year. License revenue, an indicator of new demand, grew 11% for the company’s database products and 21% for its applications unit. (Oracle’s other main source of revenue comes from maintenance contracts on already purchased software.)
The general macro economy continues to improve, Oracle management said, with enterprise (that is, corporate) customers showing an increasing willingness to spend.
That’s good news for more companies than just Oracle.
Oops; meant “articulate”
Jim; Love your excellent reporting, but love the reader comments even more. You have a very knowledgeable, article, & civil following! I feel the move to NG is happening, evidenced by recent new NG plant by WR, further commitment by PGN, etc. Do you too agree with bobj? Or, should we wait until May?
Sorry Ed. Unemployment is going nowhere. This recession gave us a chance to clean house and this socialistic regime does not have the nads to make us hire them back (again).
Ed,
Company purchase technology now, but the roll out and full use of the software is 2 years down the line. In the short term, this means more technology service and support demand. That may mean an increase in technology employment or maybe not considering how cheap it is to out source. Two years from now, it may be a different story for employment growth. However, I do take this as good time to invest in technology company because they are able to increase their top line and are pretty good at controlling their bottom line.
Jim,
You did not complete this piece with names of some suitable stocks.
Could you finish the sentence:
“That’s good news for more companies than just Oracle”……
Thanks
I will happily grant the caveat that Oracle is exemplary of a good portion of the tech sector. I will also grant that this news could mean more hiring in that sector, which would be good for the economy.
Unfortunately, the tech sector is only a small slice of the U.S. economy, which is still bleeding jobs.
Ed,
I would view this as being typicall of a recovery cycle. Companies will look to maximize productivity during the downturn and early recovery and will make investments in IT to do so until it is clear that the recovery has taken hold and existing personnel is stretched to the point that new hiring is mandatory to support further growth.
I view it as an inconclusive predictor of future hiring. If demand stabilization continues through the second half and is viewed as continuing then hiring will resume.
EdMcGon,
You might be right regarding the second year, but the news from Oracle actually means more jobs, but a different type of job.
It can be argued that the news implies more tools and procedures to improve performance and efficiency which means resistant to hire.
But both the company that implements (the SAPs, MICROSOFT, ORACLE, CISCO, HP, etc) and the personnel who actually use the tools gain.
In addition, with these tools a new type of job is needed because the involved personnel have to be well trained and skilled with higher salaries. Problem is the “skill level” you find. But that’s another story.
My line of work is related with the field so my comments have the obvious caveats, yet consider that is something that comes from my field observations.
Jim,
This is a “glass half full” conclusion, even for you. You do realize that corporate customers being willing to spend on software indicates they are trying to pull every little ounce of efficiency out of existing staff? This indicates a reluctance to hire any new staff, which does not bode well for unemployment, or the economy as a whole.
Your prediction of a second half 2010 downturn still stands, and could arguably be reinforced by the Oracle news.
Jim:
Yahoo news had article this morning saying opposite, “Year-end Growth Spurt not Likely to be Repeated” .
What’s you take on that?
Pulled the trigger on ECA and APA today. With natural gas trading at the low end of the range it seems like a good time for the buy low.