First Quarter 2009 Outlook

- New software license revenues are expected to be up 10% to 20% year over year; total revenue is expected to be up 18% to 20% year over year on a non-GAAP basis.
- Total revenue on a GAAP basis is also expected to be 18% to 20%.
- Non-GAAP EPS is expected to be 26 cents per share or 27 cents per share. GAAP EPS is expected to be 17 cents per share to 18 cents per share.
- This guidance assumes a tax rate of 29.9% versus 30% last year. If current exchange rates hold for the entire quarter that will result in 5 points of positive currency impact.

Key questions from the fourth quarter earnings call conducted by Oracle Corporation on June 25, 2008.

Heather Bellini (UBS): Could you comment or elaborate a little on the environment thus far in the first quarter?

Safra A. Catz: In March, we already felt confident about how things were going, worldwide, including in North America. We have extremely strong pipelines, both in North America and worldwide, and feel rather confident about our prospects in the first quarter. We have extremely difficult comparisons - probably one of the hardest comparisons we have had in a long time since last year, first quarter was a 35% growth quarter and so we always look at that. So far things look very good. Deals are closing. In the fourth quarter we did not close everything so things have started to close already now and North America is doing well, as it has been for the past few years.

Heather Bellini (UBS): Do you have any comment on the U.K. and Europe in general?

Safra A. Catz: No, we are not seeing a marked slowdown at this point from our pipeline numbers but it is early in the quarter and we do a large amount of our business at the end and so we will not see significant issues until much later, if they are there. What we do have right now is our pipelines and what we have closed so far and things look good for us in Europe.

Sarah Friar (Goldman Sachs): Your goal over the past five years has been 20% earnings growth and for at least the last four of those years, you have over-delivered. Given where you stand today, is this a reasonable goal for the company looking forward, for the next three-plus years?

Safra A. Catz: I do not think that our strategy is in any way running out of gas, so our model is such that we have so much leverage in it that when we sell for instance a retail application, invariably those customers also buy some of our other applications, whether CRM or ERP. Invariably they buy database and middleware, and so as our global business units continue and as our product line continues to expand these products are synergistic and we feel that our strategy has a lot of time ahead of it. In fact, as far as a nine-inning baseball game, I am not sure we are even in the second inning at this point. We are optimistic long-term. As for margins, our model again has enormous leverage. The maintenance base continues to grow. It is profitable. We have a large customer base and they continue to want our newest software, which is what they get when they pay their maintenance. As that continues to grow, it brings our margins up. In addition, we benefit from the massive scale of Oracle Corporation worldwide and we benefit from the economies of scale that we get. And either as we grow or through acquisitions, we benefit from that scale and invariably we end up with some margin expansion.

Sarah Friar (Goldman Sachs): You have spoken in prior quarters about taking a look at closure rates and trying to be conservative based on some of the factors that play into different quarters. As you have thought about first quarter, you have said pipelines look healthy. Have you tried to be more conservative on closure rates to get to the guidance that you got to in order to leave yourself cushion should the environment get worse or just the seasonality factor play in?

Safra A. Catz: In the third quarter, we were using extremely conservative closure rates and were particularly cautious in our guidance because Bear Stearns was going under and all sorts of things were happening literally right around that time. We changed from our regular pattern for third quarter and to our benefit, things worked out much better than we guided to, simply using those conservative closure rates et cetera turned out to be unnecessary. However, now we are just using our regular closure rates, et cetera, and we are being down the middle. The guidance that you are getting is what we think is going to happen and we do it both bottom up and top down and it comes out as it comes out, and those are the numbers that I am giving you at this time.

Kirk Materne (Banc of America Securities): Could you comment on the apps business rebound?

Charles E. Phillips: There are large deals still out there. They do take longer to close in some cases and more people want to look at them but as you saw in fourth quarter, we were able to get some of those done. The pipelines are there. As we ship more of the integrations each quarter, our story gets stronger and that leads to larger deals because we can sell an integrated suite of products. The underlying driver that we have been talking about is still there.

Kirk Materne (Banc of America Securities): Asia-Pac tech growth was slower than expected. Is that a function of that particular market adopting 10g and some of the RAC options in that business?

Charles E. Phillips: It is partially some of those things but we could have executed better and we have made a management change and BEA did well in middleware and that is one of the areas we need to do better in in Asia. That did not go as well as we had hoped for the last quarter. We are hopeful and confident that we will execute better in the APAC tech business going forward. The opportunity is there; it is not a lack of market demand.

John DiFucci (J.P. Morgan): You said that the pipeline growth for the first quarter was equal to that of about a year ago. Are you talking about the percentage growth or the absolute growth?

Charles E. Phillips: The percentage growth year over year.

John DiFucci (J.P. Morgan): Do you think the apps business or the apps market has returned or seen a bounce-back or do you think it is more to do with Oracle execution?

Charles E. Phillips: It is more a market share gain than anything else. Our strategy is resonating with customers. We also have tremendous up-sell and cross-sell opportunities because we have a lot of customers who are kind of new to Oracle, at least on an enterprise-wide basis and so they have a lot of Oracle products now and the ability for us to come in and tell a different story and the value they can get by adding to that, it is just different than it was a couple years ago. I do think we are in a different place than everybody else.

Peter Goldmacher (Cowen & Company): Can you give an update on the Fusion applications?