BOSTON/SAN FRANCISCO Oracle Corp ORCL.O reported stronger-than-expected quarterly profit on Monday, releasing the results three days ahead of schedule after news of the pending departure of a senior sales executive fueled concerns that business was stagnating.
While the departure of senior sales personnel, particularly at the end of a quarter can often signal weaker sales, the exit of executive in question, Keith Block, appeared linked to criticisms of his boss Oracle President Mark Hurd and the company's Sun Microsystems division in internal communications that later became public.
"The things he said about his boss and the things he said about the company are very damaging. At some point Oracle has to deal with that," UBS analyst Brent Thill. "They moved on."
Block, executive vice president for Oracle's sales and consulting groups in North America and a 26-year Oracle veteran, was leaving the company, a person familiar with the matter said.
Oracle, the world's No. 3 software maker, did not officially confirm his departure but it became apparent in a call with analysts that other executives would be assuming his responsibilities. Block could not be reached for comment.
Oracle, whose chief rivals are Hewlett-Packard Co (HPQ.N), Microsoft Corp (MSFT.O) and International Business Machines (IBM.N), said fourth-quarter results were helped by a 7 percent jump in new software license revenue to $4 billion.
It also said new software sales growth in the current quarter should be flat to 10 percent higher, despite fears of further weakening in technology spending as the euro zone crisis deepens and U.S. job creation stagnates.
"Everything stayed really strong," President Safra Catz said during a call with analysts. "It was kind of two stories, what we were seeing in the news and what we were seeing in our business."
Excluding items, the company earned fourth-quarter profit of 82 cents a share, outperforming the 78 cents forecast of analysts polled by Thomson Reuters I/B/E/S.
But its ailing hardware business inherited through its acquisition of Sun Microsystems, remained a drag with hardware product sales diving 16 percent to $977 million.
Although Chief Executive Larry Ellison has said he expects hardware revenue and margins to grow during the current financial year, Oracle forecast first-quarter hardware sales will decline between 7 percent and 17 percent from a year earlier.
Comments by Block about Oracle's hardware had proved particularly embarrassing for Ellison.
According to a transcript of comments made in July 2011 to a colleague in human resources via Oracle's instant messaging service, Block said: "Nobody talks about Sun. Even the Sun customers. It's dead dead dead."
The comments became public in the latest quarter in disclosures filed during the discovery phase of a lawsuit with bitter rival HP.
During the call with analysts, Oracle said Senior Vice President Joanne Olsen would take responsibility for sales of business management applications in North America.
Company officials also told UBS' Thill that Senior Vice President Matthew Mills would oversee responsibility for sales of hardware, database software and middleware in North America.
Rumors of Block's departure had pushed Oracle shares down 2 percent in Nasdaq trading on Monday. But the stock recovered and was up 3.5 percent after hours at $27.90 on the forecast-beating earnings. The company also authorized an extra $10 billion for share buybacks.
(Additional reporting by Edwin Chan and Poornima Gupta; Editing by Matthew Lewis, Richard Chang and Edwina Gibbs)