Oracle maintains healthy profit

By ADAM GIFFORD

Oracle New Zealand is maintaining healthy profits despite slipping revenue, with the company making a $7.25 million after-tax profit in the year to May 2003 on revenue of $43.6 million.

Figures filed with the Companies Office show profit was down on the previous year, when it made an $8.26 million profit on revenue of $48.8 million from sales of its database and application technology.

New Zealand general manager Robert Gosling said the company had moved to a more indirect sales model with an increased focus on margin as a key measure of success.

This means while revenue has trended down from $58.9 million in 1999, returns have improved. Profit that year was a mere $1.1 million.

"There has been a big move in the IT industry since the dotcom era from being revenue-driven to being margin-driven, so we had to make that transformation," Gosling said.

"We are now an organisation which is appropriate to the market, with margins you would expect in line with our corporate goals, and we can start looking at growth."

He would not say if this year's revenue in New Zealand was on par with last year, even though Oracle posted its worldwide results last week.

They show while revenue grew only 7 per cent to US$10.2 billion ($16.2 billion), net income jumped 16 per cent to US$2.7 billion. The operating margin was a record 38 per cent.

Oracle's database technology remained at the core of its business, accounting for US$7.7 billion of the total. Revenue from Oracle applications slipped 3 per cent.

Chief executive Larry Ellison said new database licence sales had been growing at 15 per cent since the release of the Oracle 10g database six months ago, which allows it to be run on grids or large clusters of low-cost servers.

Although software revenue was up 12 per cent to US$8.1 billion, services revenue declined by 8 per cent to US$2.1 billion, a sign that work on rapid implementation methodologies and software hosting and management technologies is bringing savings to customers.