Ellison's vision of the enterprise software market is fairly simple: the growth rate is slow, there are many players, and customers want to deal with only a few vendors. As a result, over the past few years Ellison has been buying up large, as well as mid-size, competitors to consolidate the industry.
The strategy is certainly controversial. After all, the history of tech mergers has been mostly disappointing. Look at HP's (NYSE: HPQ ) deal for Compaq or Symantec's (Nasdaq: SYMC ) purchase of Veritas.
Yet, there is evidence that Ellison's strategy is gaining traction. This week, Oracle announced preliminary estimates for the second quarter. Sales are expected to surge 25% to $4.85 billion. Prior guidance was for a growth rate of 13% to 17%.
Earnings are forecasted at $0.24 per share. This compares with Oracle's former guidance of $0.21 to $0.23 per share.
Top-line growth of 25% is definitely impressive for a company of Oracle's enormous size. Typically, a company with annual revenues of $15 billion to $20 billion will have revenue growth of 5% to 10%, if there is any growth at all.
What's more, Oracle is showing growth despite a tough information technology market. Customers are fairly demanding and competition is still fierce, such as from SAP (NYSE: SAP ) . Oracle is also facing competition for its core database business. For example, upstart companies like MySQL are providing low-cost alternatives.
But, according to Oracle's preliminary results, the database business was strong in the second quarter, with 18% growth. The company's applications business -- which includes such things as software to manage payroll, inventory, and customer accounts -- increased 56% (which excludes the impact of the acquisitions for Siebel and Retek).
Of course, focusing on one quarter can be dicey. Then again, Oracle has spent $19 billion on acquisitions and has had several years to integrate the transactions. Now, with a broadened customer base and product offering, Oracle can test its vision. Given the second quarter's preliminary results, it looks like things may be finally paying off.
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Fool contributorTom Taullidoes not own shares mentioned in this article.