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Oracle Corp. Reports Operating Results (10-Q)

December 21, 2012 | About:
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10qk

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Oracle Corp. (ORCL) filed Quarterly Report for the period ended 2012-11-30.

Oracle Corporation has a market cap of $155.82 billion; its shares were traded at around $33.65 with a P/E ratio of 13.4 and P/S ratio of 4.1. The dividend yield of Oracle Corporation stocks is 0.7%. Oracle Corporation had an annual average earning growth of 18.6% over the past 10 years. GuruFocus rated Oracle Corporation the business predictability rank of 5-star.

Highlight of Business Operations:

We recorded adjustments to reduce support obligations assumed in business combinations to their estimated fair values at the acquisition dates. As a result, as required by business combination accounting rules, we did not recognize software license updates and product support revenues related to software support contracts that would have been otherwise recorded by the acquired businesses as independent entities in the amounts of $4 million and $10 million for the three months ended November 30, 2012 and 2011, respectively, and $8 million and $24 million for the six months ended November 30, 2012 and 2011, respectively. To the extent underlying support contracts are renewed with us following an acquisition, we will recognize the revenues for the full values of the support contracts over the respective support periods, the majority of which are one year.

In connection with our acquisitions, we have estimated the fair values of the cloud software subscriptions, software support and hardware systems support obligations assumed. Due to our application of business combination accounting rules, we did not recognize new software licenses and cloud software subscriptions revenues related to contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $12 million and $31 million for the three and six months ended November 30, 2012, respectively. We also did not recognize software license updates and product support revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $4 million and $10 million for the three months ended November 30, 2012 and 2011, respectively, and $8 million and $24 million for the six months ended November 30, 2012 and 2011, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $3 million and $9 million for the three months ended November 30, 2012 and 2011, respectively, and $8 million and $19 million for the six months ended November 30, 2012 and 2011, respectively.

Our new software licenses revenues were $2.2 billion and $2.0 billion in the second quarters of fiscal 2013 and 2012, respectively. Our cloud software subscriptions revenues were $218 million and $89 million in the second quarters of fiscal 2013 and 2012, respectively. In constant currency, new software licenses revenues and cloud software subscriptions revenues increased by 12% and 145%, respectively, in the second quarter of fiscal 2013 due to improved customer demand for our software product offerings, our sales forces execution and

Our new software licenses revenues were $3.5 billion and $3.4 billion in the first half of fiscal 2013 and 2012, respectively. Our cloud software subscriptions revenues were $421 million and $174 million in the first half of fiscal 2013 and 2012, respectively. In constant currency, new software licenses revenues and cloud software subscriptions revenues increased by 8% and 142%, respectively, in the first half of fiscal 2013 primarily due to the same reasons as noted above. In reported currency, cloud software subscriptions revenues in the amount of $31 million that would have been otherwise recorded by our acquired businesses as independent entities were not recognized in the first half of fiscal 2013 due to business combination accounting rules.

Long-Term Customer Financing: We offer certain of our customers the option to acquire our software products, hardware systems products and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts dates of execution. We record the transfers of amounts due from customers to financial institutions as sales of financial assets because we are considered to have surrendered control of these financial assets. We financed $491 million and $424 million, respectively, or approximately 12%, of each of our new software licenses and cloud software subscriptions revenues in the first half of fiscal 2013 and 2012 and $64 million and $61 million, respectively, or approximately 4% and 3%, respectively, of our hardware systems products revenues in the first half of fiscal 2013 and 2012.

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