Thursday, 20 December 2007

Oracle proves everyone wrong

Concerns that slowing economic growth would cause key customers to throttle technology spending, were shucked yesterday by software industry mainstay Oracle. An expansion into specialty software markets and a tight rein on expenses helped Oracle turn in a strong second quarter and issue an upbeat outlook for the third, as net income rose 35%, to $1.3 billion (£650 million) in the quarter that ended November 30Th. Revenue increased 28%, to $5.3 billion (£2.65 billion), surpassing the $5.04 billion (£2.52 billion) expected by analysts. Sales of new software licenses, a closely watched indicator of future revenue, climbed 38%, exceeding Oracle's forecast that the bookings would increase between 15% and 25%.

CEO of Oracle, Larry Ellison, said “Oracle plans to expand into additional industry areas. That's our strategy for growth." Oracle also said revenue would increase between 21% and 24% in the current quarter, which ends in February. Analysts expected Oracle to increase revenues by 18% in the third quarter.

Oracle is the top supplier of database software and an emerging power in business applications, which companies use to forecast sales, plan production schedules, and manage budgets. Oracle has spent more than $24 billion (£12 billion) to buy more than 40 companies since the beginning of 2005 to gain ground in the applications market from leader SAP.

Analyst expected Oracle to fail in buying so many companies as they would fail to integrate all application. But they're just obliterating revenue and earnings expectations by acquiring companies. It proved that Mr Larry Ellison was right yet again as Oracle stock gained 6.6%, to $22.12 (£11.06), in extended trading. As of the close, Oracle shares had risen 21% in 2007, while shares of SAP have slumped more than 4%. (source: Businessweek)

Viacom Inc. said yesterday that it has selected Microsoft Corporation as its internet advertising partner in a five-year agreement initially valued at an estimated $500 million £250 million) that involves online games, shows and movies. Microsoft will help Viacom place advertising on Viacom's U.S. Web sites and be the exclusive seller of its remnant display advertising, or ad space Viacom has been unable to sell.

As part of the deal, Microsoft will also license on a non-exclusive basis long and short-form television and movies from Viacom for the MSN portal and the Xbox 360 game system's online network. Microsoft has also agreed to buy ads on Viacom's broadcast and online networks over five years and help Viacom establish itself as a publishing partner on Microsoft's casual Internet gaming sites.

The Redmond, Washington-based software maker has attempted to make inroads against Google Inc. online advertising business over the past year as each company has raced to purchase new advertising businesses. Yahoo signed a deal in April with Viacom to provide search advertising for 33 of its Web sites, which remains in place. (source: Reuters)

The Competition Commission has made its decision on the BskyB stake in ITV and confirmed that, the satellite broadcaster, should cut its stake in ITV to below 7.5% because the shareholding reduces competition in the all-TV market and works against the public interest.

If BSkyB sold 10.4% of its 17.9% ITV holding at the price of 84.2p, it would crystallise a loss of £205 million. John Hutton, the Secretary of State for Business, has until January 29, 2008, to consider the Competition Commission's report and announce final decisions, but in publishing the findings early he has indicated he is minded to accept its possible remedies.

The move re-opens the door for Virgin Media and other potential suitors to attempt a merger with ITV. As the market opened, shares in ITV rose by 1.2p to 84.2p on possible takeover speculation, while BSkyB shares were virtually unchanged.

The watchdog decided against forcing BSkyB to sell the whole of its 17.9 per cent stake as demanded by Virgin Group, saying that a partial sale was less intrusive and that with a holding below 7.5% Sky would be unable to materially influence ITV's strategy.

A statement from BSkyB said that the broadcaster was considering the contents of the Commission's report carefully. It said: "The next phase of this process lies with the Secretary of State. We will be making representations to him in due course." BSkyB snapped up the stake in ITV for £940 million, or 135p a share, in November 2006 when NTL, its pay-TV rival, was trying to mount a takeover.

BSkyB, where former chief executive James Murdoch replaced his father Rupert as non-executive chairman this month (News Corporation on taking over Dow Jones), has always insisted that it had not broken any merger rules when it acquired its ITV stake, which it called a long-term investment. (source: Timesonline) - Heathrow voted worst airport (article on BSkyB ITV shares), Virgin Lost 40 000 customers & Sainsbury's Bid dropped (includes aticle on Virgin & BskyB sales)

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