Oracle earns, though flat year-to-year

Second quarter 2009 looked much like second quarter 2008 for Oracle's per-share earnings, announced Thursday in its quarterly call. It would have been better if the dollar hadn't muscled up.

GAAP earnings for the Redwood Shores, Calif-based IT giant were 25 cents / per in the just-released Q2 earnings report (PDF available here), in line with last year's numbers. Had the dollar not strengthened during the quarter that ended November 30, the return would be been 29 cents / share. Overall, the company held the line, but the flat earnings are the first profitability decline for the firm in 12 quarters.

The dollar's fluctuations and recovery were a central conversation on the call. Executive VP and CFO Jeff Epstein spent the first portion giving a sustained explanation of just what a pain currency problems can pose for a global business -- everything from supplies to tax rates.

A casual earnings-call listener today would in fact be forgiven for thinking that Oracle is the only company in the history of the nation to experience taxation. "To give you a tangible example of the currency impact on tax," said president Safra Catz, "the shift in the dollar alone during the quarter completely overwhelmed the benefit we received from the R&D tax credit." Refreshing to hear, actually -- look, we have income to tax!.

The sales team has been experiencing some win of late, particularly in the ongoing battle against Salesforce. CEO Larry Ellison noted that the company signed its largest-ever on-demand sales force automation contract during the quarter, and also sold its first HP Oracle Database Machine, which is reported to be exhibiting impressive speed in field tests.

The company's revenues, when broken out by category, shows that new software licenses and services as percentages of revenue were both down a bit in Q2, compared to the same period last year: -3% and -2% respectively. Investors in particular are interested to see the numbers for new stuff, and some market activity after the bell may reflect concern that it's low. But software revenues on existing contracts were up (8%), as were license updates and product support (14%).

Economy eschmonomy, by the way -- the company isn't cutting any slack to maintenance-contract customers on the fee front. In response to an analyst's question concerning whether businesses are asking for price breaks on maintenance, Ellison shrugged, "A few customers tried to negotiate but that's nothing new. We experience that all the time and our renewal rates were consistent with previous quarters and I'd say nothing out of the ordinary happened."

Looking forward, in Q3 Oracle expects non-GAAP and GAAP total revenues of 8-11% assuming constant currency rates, or 1-4% assuming today's rates. As far as earnings (and remembering again not only the currency issues but those pesky taxes), the company predicts non-GAAP earnings per share to come in at 34-36 cents / share assuming constant currency rates, and a few cents less if today's rates are in force. GAPP earnings per share were forecast at 26-27 cents / share, or again a few cents lower if today's rates obtain.

Many investors regard Oracle as a significant tech-sector bellwether, and after-hours trading showed some cheer. ORCL stock closed Thursday at $16.61, down $0.13 (.78%), but in after-hours trading percolated upward to $17.10 at press time.