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Database sales boost Oracle's revenue

Oracle has reported a solid third quarter, meeting analyst expectations and posting revenue growth marked by strong sales in the company's database business.

Sales of Oracle's RAC (Real Application Clusters) technology had increased, indicating that customers are building databas grids, said chief executive officer Larry Ellison. The technology lets companies run their databases across groups of servers.

Oracle's revenue for the quarter, ending 29 February, totalled $2.5bn, up 9% from the previous year. Net income rose 11%, to $635m.

Sales of software update licences and product support remained Oracle's biggest revenue generator, growing to $1.2bn during the quarter. Revenue from new software licences also grew, while services revenue dropped 11% year on year to $486m.

Oracle's continuing campaign to acquire rival PeopleSoft cost $58m in professional services fees during the quarter.

While Oracle's database business continued its 2004 pattern of quarterly gains over 2003's results, its applications business maintained its pattern of quarterly declines. New software licence revenue held steady against last year's third quarter and revenue from updates and support rose, but services revenue dropped, leading to a 5% decline in total applications revenue to $580m.

Ellison attributed the decline in applications revenue to a "brutally competitive" industry. While Oracle faces intense pricing pressure from Microsoft and IBM in its database business, it has the advantage of unique database technology with features unmatched by its rivals.

Stacey Cowley writes for IDG News Service

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