Oracle Corporation Conference Call Nuggets: EPS Goals and Sales Capacity

Oracle Corporation (NASDAQ:ORCL) reported its second quarter earnings and discussed the following topics in its earnings call.

Balancing EPS Goals

Heather Bellini – Goldman Sachs & Co. asked:  You guys mentioned in your comments to John about how you have been hiring aggressively;  I think you mentioned you’ve hired about 1,700 people from the start of the fiscal year in your press release.

Can you talk about how you think about balancing EPS goals? I’m not talking about November but as you look going forward over the next few quarters or next year, how do you think about balancing your EPS goals with the demand opportunity you see in front of you based on the pipeline and the product lineup that you have?

Safra A. Catz – President and CFO responded: We’re always very EPS protection driven.

If markets are more difficult, we are always the ones to somehow to bring in the EPS as a general matter. So, we’ve taken a little bit of a lesson from this quarter, and we’ll continue to monitor – remember, a lot of this is our new product update and support – product support and updates business.

The overall business gets bigger.

That is of course very profitable for us, and we think we can grow profitably. I want to point out that even in this quarter, our operating margins increased. Even in a quarter where we did not actually end up selling as many new licenses as we had hoped, our operating margins increased.

We are really on track to get back to our free hardware company margin, which puts us as still the highest margins in the software industry. We have a $4 billion hardware business in us.

I’d bet on us to keep those earnings growing and protected.

Lawrence J. Ellison – CEO responded:  The 1,700, I want to make sure you put as a net number. We didn’t hire – so that is a net number minus attrition, 1,700 more people calling on customers.

We’ve been very disciplined, our margins went up while doing that.

So, to your point about protecting EPS, it is foremost in our mind to make more money while we use.

Sales Capacity

Brent Thill – UBS asked: On the sales capacity adds, you’ve been quite aggressive. Does the second quarter give you pause to potentially slow that a little or are you still aggressively moving forward?

Mark Hurd – President responded: No, I think we would continue to be aggressive where it makes sense, because we are in a unique position.

We are one of those companies that–I don’t want to make this sound too corny–but we are one of those companies people want to join. Sales people want to be part of companies that have great products that have a great market position. So, we’ve got to make sure that we are hiring the rights ones, and that’s what we’re doing.

We’re trying to be very particular that we’re getting the right folks and we’re trying to make them productive and put the kind of infrastructure in, to assimilate and get them productive as quickly as we can. But we’re going to be very, very aggressive in looking for good talent but I want to make sure I add the point that was mentioned earlier within the context of disciplined expense management.

We feel like we need more distribution and we’re going to continue to try to get it.