Oracle sees revenue rise as hardware losses narrow

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

Best known for software, Oracle acquired Sun Microsystems four years ago. Ever since, Oracle's hardware business has been in free fall.

Oracle frequently 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.

Second quarter revenue rise

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 Oracle 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.