On the week when Microsoft's
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
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
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.