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Oracle Q2 net income jumps 17 percent, but hardware sales slump

Still, sales of Oracle's specialized hardware-software appliances grew rapidly in the quarter, according to CEO Larry Ellison

Oracle's net income for the second quarter ended Nov. 30 rose 17 percent to US$2.2 billion, with software sales rising but hardware-related revenue falling, the company reported Tuesday. Revenue for the quarter rose 2 percent to $8.8 billion.

New software license revenues, which are considered a key indicator of growth and customers' buying attitudes, were up 2 percent to $2 billion. Hardware systems products revenues dropped 14 percent to $953 million.

Oracle has de-emphasized commodity hardware in favor of specialized systems like its Exadata database machine, which combine Oracle's software with servers and other components. It believes that strategy will ultimately be more profitable.

"Sales of our engineered systems accelerated in Q2," Oracle CEO Larry Ellison said in a statement. "Exadata growth was well over 100% compared to last year, and Exalogic grew more than 100% on a sequential basis. We shipped our first SPARC SuperCluster in Q2 and expect to begin deliveries of our Exalytics system and the Oracle Big Data Appliance in Q3."

Oracle has also expanded its sales force by more than 1,700 in the first half of the fiscal year, co-president Mark Hurd said in a statement. "We believe that this increase in our field organization combined with innovative new products like Fusion Cloud ERP and Cloud CRM will enable solid organic growth in the second half of this year."

Oracle executives are scheduled to discuss the results further during a conference call Tuesday.

(More to follow.)


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