FOOL CONFERENCE CALL SYNOPSIS*
By Greg Markus (MF Boring)

ORACLE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %>
500 Oracle Parkway
Redwood Shores, CA 94065
415-506-7000
http://www.oracle.com

ANN ARBOR, MI. (Dec. 12, 1996) -- ORACLE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> posted its second quarter earnings after the market closed. Quarterly revenues increased by 36%, to $1.31 billion, but earnings per share of $0.27, although well inside the $0.25 to $0.29 range of analysts' projections, missed the consensus number by a penny. Earnings per share in last year's second quarter was $0.20.

SALES BREAKDOWNS. Sales of Oracle applications products increased 77% over last year, meeting or exceeding expectations. Oracle Services (Support, Consulting, and Education) grew by 48%. Server sales were up "only" 24%, however -- largely due to the problems in Europe, as noted below. Sales of Oracle tools, continued to show negative growth, down 8% year over year. Classified by platform type, sales increased 24% for UNIX-based products, 46% for desktop products, and decreased 9% for "other" platforms.

INTERNATIONAL SALES. Sales in the Americas increased 49%, followed by Asia Pacific, up 44%, and EMEA (Europe, Middle East and Africa), up 16%, versus the same period last year. The company noted that overall top- and bottom-line growth were hurt by approximately a 3 percentage point negative currency translation due to weakness in the Japanese yen. Difficulties that Oracle has been facing in Europe were by far the primary focus of the post-report conference call with analysts, however. CFO Jeff Henley and President Ray Lane emphasized that they were not satisfied with the company's leadership in Europe nor with the caliber of the sales force in at least some countries there. Lane, calling in from Europe, said he was in the midst of taking some significant actions to remedy the situation. The word "firings" was used.

SLOWING HEAD-COUNT GROWTH. In addition to replacing top leadership at a number of European locations, the company spokesmen said that growth in employee head-count would "go on a diet," in order to trim some excess from internal expenses. They stressed that this did not mean anything like a freeze, but rather slowing the rate of growth by 3 or 4 percentage points.

RECENT CONTRACT WINS. For competitive reasons, Oracle will not go into detail about its contracts. Company spokesmen did say that Oracle had won "some big deals" in the second quarter, including one from AT&T, which remains perhaps Oracle's single largest customer.

COMMENTS ON COMPETITORS. When asked to comment on competition from Informix, Lane and Henley said that this was not a problem for Oracle. To the contrary, they derided Informix's massive marketing campaign for its Universal Server as being centered around a "band-aid" product patched together and tested for only six-weeks before being launched onto the market. By way of contrast, they emphasized that Oracle's Universal Server has been "in beta" with 300 customers for months now and will go into second stage testing and evaluation next month. Microsoft's SQL server has been a competitor recently, but Oracles sees less of Sybase or IBM's DB-2.

LOOKING AHEAD. As is customary in its industry for competitive reasons, Oracle executives declined to offer much in the way of guidance for the second half of their fiscal year, other than to say that the company intends to improve server sales (particularly in Europe) and expects some negative currency impact to continue in Q3 and Q4. Also, as previously indicated to analysts, Oracle expects to take a one-time charge of approximately $0.04 per share for in-process R&D associated with the acquisition of Datalogix in Q3. Also, the company noted that margins on Windows NT-based products are lower than those on products for UNIX platforms. Hence, as NT becomes increasingly popular, overall margins will reflect that. To counter that trend, the company's strategy has been, and continues to be, to increase the top line by offering new products and services. In particular, the company is excited about product offerings oriented toward "thin-client" (i.e., network appliance), Internet browser-based paradigms.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.