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Oracle (NASDAQ:ORCL) Looks to the Cloud


The software giant is struggling to gain traction in the hardware business. But its innovative new products and an improving US economy should give it a boost.

Since then, the purchase has enhanced a number of Oracle's products. For example, in 2010, the company launched the Oracle Exadata Database Machine X2-8, which incorporates Sun's server hardware and Oracle's software. Oracle now claims that its newest Exadata machines are the fastest servers on the planet.

Latest Earnings From Oracle Reflect Ongoing Hardware Struggles

Oracle operates through three main divisions: Software (which accounted for 70% of its revenue in the latest quarter), Hardware (16%), and Services (14%).

In the three months ended August 31, 2012, Oracle's sales fell 2.3%, to $8.18 billion from $8.37 billion in the same quarter last year. That fell short of the consensus estimate of $8.4 billion. Software sales gained 4%, but that was offset by a 19% decline in Hardware revenues and a 6% slide at the Services business.

Despite the slow sales, profits rose 11%, to 2.03 billion, or $0.53 a share, from $1.84 billion, or $0.36. If you exclude one-time items, profits would have risen 6%, to $2.61 billion, or $0.53 a share, matching analysts' expectations. That's partly because Oracle continues to lower its costs: Operating expenses declined 7% in the latest quarter.

The company's hardware business continues to face stiff competition from major competitors, such as International Business Machines (NYSE:IBM), Microsoft (NASDAQ:MSFT), and Hewlett-Packard (NYSE:HPQ).

As well, many businesses are putting off IT purchases in the face of a number of global storms, such as the ongoing eurozone debt crisis, the still-sluggish US economy and slowdowns in China and other developing economies.
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