Analyst Conference Summary


conference date: June 23, 2011 @ 2:00 PM Pacific Time
for quarter ending: May 31, 2010 (fourth quarter fiscal 2011)

Forward-looking statements

Overview: Tremendous quarter.

Basic data (GAAP) :

Revenues were $10.78 billion, up 22% sequentially from $8.76 billion and up 13% from $9.51 billion in the year-earlier quarter.

Net income was $3.21 billion, up 51% sequentially from $2.12 billion and up 36% from $2.36 billion year-earlier.

EPS (earnings per share) were $0.62, up 51% sequentially from $0.41and up 51% from $0.46 year-earlier.


Last year's Q1 was spectacular. Given current exchange rates, Q1 FY 2012 , 9% to 12% non-GAAP revenue growth. Non-GAAP EPS, $0.45 to $0.48 , GAAP EPS $0.33 to $0.36.

Conference Highlights:

Organic growth from new software license revenue was near 19%. The operating margin was 48%. "As results reflect, we clearly exceeded even our own high expectations for Sun's business." Exadata and Exalogic systems contributed to strong growth, 50% y/y, with over 1000 Exadata machines now installed. "Our goal is to triple that number in FY12." 56% hardware gross margins. Oracle can be back at pre-Sun operating margins very quickly as much operating leverage remains.

The database business has also been growing at its fastest rate in a decade.

Non-GAAP EPS was $0.75, net income was $3.9 billion.

$29 billion billion in cash and securities. $422 million was used to repurchase shares.

A dividend of $0.06 per share will be paid to stockholders of record as of July 13, 2011; payment data in August 3, 2011.

Revenues by segment: new software licenses $3.74 billion. Software license updates and product support $3.96 billion. Hardware systems $1.16 billion. Hardware support $673 million. Services $1.25 billion.

Has caught up or passed SAP everywhere in the world but Germany. Now has a large of a software business as IBM.

Operating expenses were $6.42 billion, including $1.17 billion for research and development, $2.10 billion for sales and marketing, and $255 million for general and administrative expense. GAAP operating income was $4.36 billion. Interest expense was $195 million. Income tax provision was $961 million.


Hardware model shift headwind? Attach rates are now aligned with actual sales (100% attach rate). That, over time, ramps hardware support revenue. Our Exalogic middleware runs best on Exadata. So there is synergy between software and hardware shares.

Macro economy? We give guidance from the ground up. So it reflects the economy as it is, and we continue to grow. We are optimistic enough to continue to hire for next year. We added 800 sales personnel this quarter. We believe we are under distributed; we will sell more software if we can get in front of more customers.

We are going to add appliances this fall. One will be a large memory addition for Exadata. In memory analytics is becoming increasingly important. Hadoop is not a replacement to databases, but an adjunct for Java programmers. We will release a big data accelerator this fall that will dramatically speed up the map reduce process.

To grow the top line right, we had to get rid of low-margin Sun businesses. We are selling our own storage now, while dropping Hitachi and NetApp as much as possible. We are set up to grow high margin revenues with Exadata and Exalogic going forward.

Fusion is being rolled out, we now have live customers. You can now use our software as a service or we will sell it to you to run on your private cloud. We think will be seriously challenged by Fusion and SAP will have no offering at all.

As to acquisitions, price does matter to us, but there are many small opportunities.

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Copyright 2011 William P. Meyers