Oracle hardware losses reduced

Oracle’s run of bad financial results ended today as revenue and earnings beat market expectations. The headline news is the company managed to cut the losses in its hardware division.

Best known for software, the company acquired Sun Microsystems four years ago. Ever since the business has been in free fall.

Oracle often tells journalists it remains happy with the hardware business and there’s a bigger picture that’s yet to emerge. Officially it repeats the message that it makes good profits from shifting kit even though its market share continues to decline at an alarming rate.

Oracle’s second-quarter results shed more light on this. During the quarter Oracle’s total revenue climbed 2 percent to US$9.3 billion. That’s better than the market expected and by any standards a good result.

The company reports hardware systems product revenue fell 3 percent to US$713 million. Meanwhile, overall hardware systems sales, a figure that also includes support, was static at US$1.3 billion.

Compared with recent reporting periods which saw large drops, it looks as if the hardware business stabilised during the quarter. On paper that’s a good result – the first good result in many quarters for Oracle’s hardware business.

During the results announcement, the company said it expects to record the first hardware sales growth since this acquisition during the current quarter.

Oracle aims to move from general purpose hardware towards more profitable, but highly engineered, systems integrated with the company’s software.  It’s a plan and a bold one, the rest of the systems market seems to be moving towards increased commoditisation.