UPDATE 3-Oracle signals strong tech spend, shares rise

Thu Mar 24, 2011 7:11pm EDT

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By Bill Rigby

SEATTLE, March 24 (Reuters) - Oracle Corp ORCL.O forecast a 4 to 14 percent rise in sales of new software this quarter and hiked its dividend by a fifth, fueling hopes that a global resurgence in technology spending remains intact.

The business software maker run by flamboyant billionaire Larry Ellison again delivered quarterly results and forecasts that beat Wall Street expectations, sending its shares 3.5 percent higher.

"It's green lights across the board," said Richard Davis, an analyst at Canaccord Genuity who has a 'buy' rating on the stock.

"What Oracle cares about is how many dollar bills are in the bank at the end of the quarter versus the beginning, and on that basis, they beat estimates."

New software license sales, which generate high-margin maintenance contracts and are a good gauge of future profits, leaped 29 percent to $2.2 billion in the fiscal third quarter, ahead of what many analysts had expected.

Oracle, which last year branched into server hardware through the purchase of Sun Microsystems, reports earnings a month earlier than rivals and is closely watched for insights into the latest industry trends.

Its results offered fresh evidence of the upward curve of technology spending as it battles Hewlett-Packard Co (HPQ.N) and International Business Machines Corp (IBM.N) to lead the cloud computing and data center revolution.

"What we're hearing from software companies is that business continues to cruise along," said Davis. "It's not like people are throwing money at you, but there's money to to be spent."

Ellison, not one typically to shy away from blasting competitors in public, was on jury duty and absent from Thursday's conference call with analysts.

NO IMPACT FROM JAPAN

Oracle reported a 37 percent leap in sales to $8.8 billion for the fiscal third-quarter, edging past Wall Street forecasts of $8.7 billion.

Excluding one-time items, it made a profit of $2.8 billion, or 54 cents per share, compared with $1.9 billion, or 38 cents per share, in the year-ago quarter. Wall Street analysts, on average, had expected 50 cents per share.

The company boosted its quarterly dividend to 6 cents per share from 5 cents. The 20 percent raise matched that of rival SAP's (SAPG.DE) recent increase. [ID:nLDE70O20U]

Executives told analysts they saw no material impact from the unfolding logistical tangles and power disruptions in Japan, which yielded 5 percent of its revenue in fiscal 2010.

This quarter, Oracle forecast a rise in hardware sales of 2 to 8 percent in constant currency terms. It forecast earnings, excluding items, of 69 to 73 cents this quarter. That is ahead of the 66 cents, on average, expected by analysts.

Oracle's strategy of offering a one-stop shop for business software and hardware is showing signs of paying off in an improving economy.

Like IBM and Cisco Systems Inc (CSCO.O), Oracle and HP are aiming to provide the infrastructure for companies to move toward "cloud computing," where data is handled remotely in data centers rather than on premises.

The looming battle between Oracle and HP is spiced up by the fact that former HP Chief Executive Mark Hurd -- who left last year after a flap over inaccurate expense reports and a questionable relationship with a female contractor -- now works at Oracle. [ID:nN06147588]

Oracle's shares shot up to $33.26 in after-hours trading from a close of $32.14 on Nasdaq. The stock is up 2.7 percent over the last 12 months, compared to a 3 percent rise in the Nasdaq. (Editing by Edwin Chan, Richard Chang and Andre Grenon)

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