Oracle 2009 Annual Report Download - page 37

Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an overview of our key operating business segments
and significant trends, including changes to our business as a result of our acquisition of Sun Microsystems, Inc. (Sun) in fiscal 2010. This overview is followed
by a summary of our critical accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our
reported financial results. We then provide a more detailed analysis of our results of operations and financial condition.
Business Overview
We are the world’s largest enterprise software company. As a result of our acquisition of Sun in January 2010, we are also a leading provider of hardware
systems products and services. We develop, manufacture, market, distribute and service database and middleware software, applications software and hardware
systems, consisting primarily of computer server and storage products, which are designed to help our customers manage and grow their business operations.
Our goal is to be the world’s most complete, open and integrated enterprise software and hardware company. We offer customers scalable, reliable, secure and
integrated software and hardware solutions that are designed to improve transactional efficiencies, adapt to an organization’s unique needs and allow better ways
to access and manage information and automate business processes at a lower total cost of ownership. We seek to be an industry leader in each of the specific
product categories in which we compete and to expand into new and emerging markets.
We believe our internal, or organic, growth and continued innovation with respect to our software, hardware and services businesses are the foundation of our
long-term strategic plan. In fiscal 2010, 2009 and 2008 we invested $3.3 billion, $2.8 billion and $2.7 billion, respectively, in research and development to
enhance our existing portfolio of products and services and to develop new products, features and services. We also believe that an active acquisition program is
an important element of our corporate strategy as it strengthens our competitive position, expands our customer base, provides greater scale to accelerate
innovation, grows our revenues and earnings, and increases stockholder value. In recent years, we have invested billions of dollars to acquire a number of
companies, products, services and technologies that add to, are complementary to or have otherwise enhanced our existing offerings. We expect to continue to
acquire companies, products, services and technologies in furtherance of our corporate strategy.
We are organized into three businesses—software, hardware systems and services—which are further divided into seven operating segments. Each of these
businesses and operating segments has unique characteristics and faces different opportunities and challenges. Although we report our actual results in U.S.
Dollars, we conduct a significant number of transactions in currencies other than U.S. Dollars. Therefore, we present constant currency information to provide a
framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. An overview of our three businesses
and seven operating segments follows.
Software Business
Our software business, which represented 77%, 81% and 80% of our total revenues in fiscal 2010, 2009 and 2008, respectively, is comprised of two operating
segments: (1) new software licenses and (2) software license updates and product support. On a constant currency basis, we expect that our software business’
total revenues generally will continue to increase due to continued demand for our software products and software license updates and product support offerings,
including the high percentage of customers that renew their software license updates and product support contracts, and due to our acquisitions, which should
allow us to grow our profits and continue to make investments in research and development.
New Software Licenses: We license our database and middleware as well as our applications software to businesses of many sizes, government agencies,
educational institutions and resellers. As a result of our acquisition of Sun, we acquired certain software technologies, including Java, which is a global software
development platform used in a wide range of computers, networks and devices.
33
Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠