Oracle reverses decline in hardware revenue during Q3

Engineered system sales push hardware product revenue up 8 percent

Oracle's third-quarter revenue rose 4 percent to US$9.3 billion while net income increased 2 percent to $2.6 billion, buoyed by growth in new software licenses and cloud subscriptions as well as a long-anticipated rise in hardware product revenue.

Hardware systems product sales, which had declined steadily since Oracle's acquisition of Sun Microsystems, were up 8 percent to $725 million in the quarter ended Feb. 28, while hardware systems support revenue increased 5 percent to $598 million. New software licenses and cloud subscription revenue rose a combined 4 percent to $2.4 billion.

Software license updates and product support revenue jumped 5 percent to $4.6 billion.

"Oracle Cloud Applications and Engineered Systems are both rapidly growing, billion dollar run-rate businesses," Oracle chief financial officer Safra Catz said in a statement. The company has focused its marketing efforts on such systems, which include the Exadata database machine, while de-emphasizing sales of lower margin commodity servers.

Oracle's engineered system line is experiencing rapid growth, "while throughout the industry traditional high-end server product lines are in steep decline," Oracle CEO Larry Ellison said in a statement.

Meanwhile, Oracle's quarterly cloud application revenue "is now approaching $300 million," company president Mark Hurd said in a statement. "All of our strategic Cloud Application Suites, including Fusion Enterprise Resource Planning, Fusion Human Capital Management and Fusion Customer Experience, posted triple-digit revenue growth."

Oracle executives are expected to discuss the third-quarter results further during a conference call on Tuesday.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Chris Kanaracus

IDG News Service
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