Congrats to Oracle

Oracle posted a 35% jump in net income on strong gains in revenue from new software licenses. Overall sales rose 27% to $4.41 billion.

It's hard to argue with a good quarter...so congrats to Oracle. It seems like the press and analysts are really buying into its aggressive M&A approach. What's paid off is the installed base that came with the acquisitions of PeopleSoft, JD Edwards, and Siebel. A year ago, these customers were on the verge of jumping ship but Oracle's Applications Unlimited program saved the day (offering customers lifetime support) . Now, Oracle is reaping the rewards as evidenced by its success this quarter.

Oracle's apps license of $423 million is however, still about 4x less than SAP's $1.7 billion last quarter. In regards to Larry's statement about growing consistently and rapidly to overtake SAP--assuming that Oracle continues to grow at 32% (very optimistic) and SAP continues to grow at 7% (overly pessimistic), it would still take Oracle 7-10 years to overtake SAP. A lot of what Oracle says about being on par with SAP is hype. But Oracle is a worthy competitor and it definitely has legs to stand on. What was interesting about the earnings call today was that there seemed to be a shift away to attack BEA instead of SAP. I don't envy BEA's position. Oracle has a great middleware story and BEA will have a tough time standing its ground.

The one thing that I did think was odd was the mention of SAP's A1S launch. Oracle's trying to spin a story about how SAP is launching "lots of ERP systems" while Oracle is taking a one suite approach. That just seems strange to come out of Larry's mouth when Oracle is actively developing, maintaining, and selling at least three separate ERP systems. The SME market is a legitimately lucrative opportunity, I don't think anyone would refute that; and the fact that SAP is offering apps that better fit these SME's needs is a step in the right direction.