Oracle Corporation (ORCL) announced first quarter of FY2010 earnings per share of 29 cents, matching the Zacks Consensus Estimate. First quarter total revenues were down 5% year over year at $5.1 billion.

New software license revenues were down 17% to $1.0 billion. Technology new license revenues were $711 million, down 19% in constant currency and down 22% in U.S. dollars. The Americas declined 11%, EMEA was down 26% and Asia declined 22%. Applications for new license revenues were $317 million, unchanged from last year on a constant currency basis, and down 4% in U.S. dollars. The Americas grew by 6%, EMEA was up 3% and Asia declined 23%.

Software license updates and product support revenues were up 6% at $3.1 billion. These revenues are annual fees customers pay to receive updated versions and enhancements of their existing products. Services revenues were $909 million, down 18% in constant currency and down 22% in U.S. dollars.

Operating income was up 14% to $1.7 billion and operating margin was up 590 basis points to 34%. Oracle increased operating income by $219 million over last year’s first quarter. Operating income on non-GAAP basis was up 7% at $2.3 billion with a margin of 46%, which is the highest since its inception. The real contributors to the robust operating margin have been license updates and product support revenues, which comprised a larger portion of the revenues in the quarter and which generally realize a higher margin than new license revenues.

The effective tax rate was 28.0%, which was below guidance of 29% due largely to lower than expected interest income, which is generally taxed in jurisdictions with higher rates. In the first quarter, the company repurchased 11.4 million shares at an average price of $21.24 per share for a total of $243 million.

Oracle generated $8.5 billion in free cash flow during the trailing four quarters, growing 14% over the same period last year. This is the highest free cash flow in the company’s history. The company had $20.6 billion in cash and investments at the end of the quarter. The increase resulted largely from the $4.5 billion debt offering completed early in the quarter and $3.7 billion of operating cash flow generated this quarter.

Long-term borrowings stood at 51.8% of shareowner’s equity at the end of the quarter. Days sales outstanding improved again this quarter from 54 days last year to 46 days this year, a testament to the quality of its receivables, the quality of customers, and the effectiveness of collection efforts, as well as a result of product mix and timing benefits.

For the second quarter of FY2010, the Zacks Consensus Estimate for earnings per share stands at 35 cents on revenue of $5.72 billion.

Oracle Corporation develops, manufactures, markets and distributes computer software that helps corporations to manage and grow their businesses. Oracle is the world’s second largest software company with a presence in 145 countries. It has become a dominant provider of relational database management systems and is also emerging as a significant player in the application software, middleware and development tools markets. Major competitors include International Business Machines Corporation (IBM), Microsoft Corporation (MSFT) and SAP AG (SAP).
Read the full analyst report on “ORCL”
Read the full analyst report on “IBM”
Read the full analyst report on “MSFT”
Read the full analyst report on “SAP”
Zacks Investment Research