Krista Bessinger - VP of Investor Relations Safra Catz - President and CFO Larry Ellison - CEO Charles Phillips - President

Heather Bellini - UBS Brent Thill - Citigroup Sarah Friar - Goldman Sachs Jason Maynard - Credit Suisse Adam Holt - J.P. Morgan Tim Klasell - Thomas Weisel Partners Peter Goldmacher - Cowen & Company Kirk Materne - Banc of America Peter Kuper - Morgan Stanley John DiFucci - Bear Stearns

Good day everyone and welcome to today's Oracle Corporation Quarterly Conference Call. Today's conference is being recorded. At this time, I would like to introduce the Vice President of Investor Relations for Oracle, Ms. Krista Bessinger. Please go ahead, ma'am.

Thank you, operator. Good afternoon everyone, and welcome to Oracle's fourth quarter fiscal year 2007 Earnings Call. With me on this call are Oracle Chief Executive Officer, Larry Ellison; Oracle President, Charles Phillips; and Oracle President and Chief Financial Officer, Safra Catz. As usual, our prepared remarks will be followed by Q&A. Before we begin, however, I would like to remind you that today's discussion may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they're subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we'll attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-K and Form 10-Q for a more complete discussion of these factors and other risks that may affect our future results or the market price of our stock. A PDF copy of our press release and financial tables, which include a GAAP to non-GAAP reconciliation, can be viewed and downloaded on the Oracle Investor Relations website at www.oracle.com/investor. With that, I'll turn the call over to Safra Catz for her opening comments.

Thanks, Krista. Good afternoon everyone, and thanks for joining us. I am going to first focus on our non-GAAP results for Q4 and fiscal year '07. I'll then review guidance for Q1 and turn the call over to Larry and Charles. As you can see from our numbers, we had another very strong quarter and a very strong close to our fiscal year. We again executed extremely well across the board. New software license revenue was very strong, with revenues of $2.5 billion, up 17% year-over-year for the quarter and up 20% for the full year. Deal volumes continue to increase and like the rest of the year, Q4 was very broad-based in terms of deal size and not dependent on any unusually large transaction. Technology license revenues were up 18% in Q4 and up 15% for the full year. We saw remarkable strength across database options and middleware, resulting in significant acceleration from the 9% growth in fiscal '06. Technology growth was strong across all geographies, with technology license revenues up 20% in the Americas, 20% in EMEA and 10% in APAC. Applications were strong as well, with license revenue of $726 million, up 13% in Q4, and up 32% for the full year, again despite a very difficult year ago comparison. Hyperion contributed $43 million to new software licenses, with license split approximately 60-40 between [apps and tech]. The story for the year is that we grew all our businesses faster than the market, taking market share from SAP, from BEA, and from IBM. Turning to product updates and support, our revenue was up 19% on a non-GAAP basis to $2.3 billion. We continue to see world-class renewal rates. Our revenue growth also remains extremely profitable, and we continue to grow market share and margins simultaneously. Non-GAAP income from operations grew 23% to $2.7 billion, resulting in operating margins of 46%, up a 160 basis point year-over-year despite a 140 basis point headwind from the consolidation of i-flex and Hyperion. Margins have started to improve as earlier acquisitions are coming up to scale and we expect to see continued margin improvement in fiscal year '08. Last, we grew EPS by 28% to $0.37 on a non-GAAP basis, coming in $0.03 above our guidance, and well above our stated goal of 20% average EPS growth. We've now completed three years of our five-year non-GAAP EPS growth plan of 20% a year and we are delivering earnings growth way ahead of our target. In Q4, we bought back approximately 55 million shares at an average price of $18.33, spending about $1 billion, making it $4 billion in fiscal year '07. The rate of our buyback for the other $4 billion we have authorized, will take into account our commercial paper obligations as well as other uses. Operating cash flow for the trailing 12 months increased by almost $1 billion to $5.5 billion, while free cash flow increased 21%. Now let me turn briefly to guidance, and while we feel good about our ability to execute and competitive position heading into FY '08, Q1 is typically our smallest seasonal quarter, and as you know last year Q1 of '07 was a very strong quarter. Last year, new software license revenues were up a record 28% in Q1 and total revenues up 26% year-over-year. Our guidance for Q1, not including Agile is as follows: New software license revenues are expected to be up 20% to 30% year-over-year. Total revenue is expected to be up 18% to 21% year-over-year on a non-GAAP basis. Total revenue on a GAAP basis is expected to be up 19% to 21%. This year we will include stock option expense in our non-GAAP numbers. So that means that around $50 million in expense per quarter will be included in the non-GAAP EPS number. Now, as a transition I'll give you both numbers, so you can align your model. So, non-GAAP EPS is expected to be $0.21 as compared to $0.18 last year, but that number excludes the stock option expense as we did last year. Including the stock option expense, the non-GAAP EPS number is expected to be $0.20 as compared to what would have been $0.17 last year. GAAP EPS for the first quarter is expected to be $0.15, up from $0.13 last year. Now this guidance assumes a tax rate of $28.6 for Q1, down from $30.4 in Q1 last year. Now, if current exchange rate holds for the entire quarter that will result in 2 to 3 points of positive currency impact in Q1. But as you know, currencies are likely to fluctuate, and as a result the currency impact in Q1 could be different then our guidance assumed. So with that, I'll turn the call over to Larry for his comments.

Thank you, Safra. As Safra commented, the rules for GAAP or non-GAAP have changed again, where now non-GAAP will include our stock option expense. So, our stock option expense is included in GAAP as well as non-GAAP. And, as you know, as per the General Accepted Accounting Principals, the rules around revenue and revenue recognition are rather complex and they do change overtime. So, one of the numbers I would like to call to your attention is the number that I find very interesting, and are monitored very closely, and that is our operating cash flow divided by a number of shares, in other words the operating cash flow per share. Now, it’s interesting to look back in the past year, our GAAP earnings per share were $0.81. However, our operating cash flows per share was a $1.05. And again, I find those numbers very interesting then GAAP earnings per share $0.81, non-GAAP earnings per share for the year $1.01, operating cash flow per share $1.05. As you know, this cash, as Safra mentioned our operating cash flow went up a $billion from around -- approximately around is amounting from $4.5 billion to $5.5 billion, and its cash that allows us to make strategic acquisitions. This cash allows us to buy stock back. As we said before, we bought our stock back at a rate of $4 billion for the previous year and we will continue to buy back stock in the marketplace. We'll continue to make acquisitions, all enabled by our cash flow. So that's a number we look at very, very closely. We think it’s a number that is an interesting measure of the progress we are making at this business as that cash flow increases. I'll turn it over to Charles.

Thanks, Larry. Just a few comments by product area. We were very pleased, what our database did in the quarter, both new options and old options. So, there is acceleration in enterprise manager and advanced securities, but the new options by database also did very well. That’s a product that’s apparently a year old and we had to merge deals in the quarter with Eli Lily, [Generali] in Italy and the government of Netherlands. Also some good wins around the Enterprise Search. Partitioning one of the older options also did well with renewed momentum. Companies like China Mobile, FedEx, Daewoo Securities did large deals in the quarter. I think another important development is that we set a world record price performance benchmark in the quarter, and I know benchmarks don’t exactly excite people, but let me tell you why this one is important. We have always had the absolute performance leads, but this is the first time in the history of Oracle where we have price performance leads against Microsoft and everyone else. So what that means is, there has been a technology change where the larger cash site is the 8 megabyte L3 for instance on a Xeon really favors our architecture, and that combined with our new per stock pricing, we have the price performance lead by a long shot. And so as we move into the lower end of market, that’s going to help us to combine that with Enterprise Linux and more memory prices, our price performance lead is going to increase. So, tomorrow we are announcing a new remarketed program. So what that means is partners and resellers can join the Oracle reseller program instantly and begin to sell these products without administrative processing and overhead. So you can select these orders online, processing these contracts will be done in minutes and not days. Good for the resellers, and that’s based on feedbacks and they'll make it easier to do business with Oracle, and we have done that. The other milestone in the quarter is that Gartner released her annual report on Database market share. According to Gartner, we have a 47.1% share up year-over-year. And I've been waiting to say this for a while our market share is now greater than IBM and Microsoft in the database business combined. We've retained our number one status on Linux with an 82.6% market share, IBM has 9.3. We are also number one status on UNIX at 65.7%. The middleware business continued momentum, we achieved a major milestone in the quarter by completing the release of Oracle Fusion Middleware 10g R3. That product has over a 1000 new features. That's important because these customers upgrade quickly. 80% of our customers are on the latest two releases of that product. They are seeing value and upgrading. It's also important because these new features act as a wedge to get into new accounts. Standards allow us to enter and coexist on top of existing middleware product from third parties. So to give you a few examples of what happened in the quarter, Time-Warner deployed our SOA suite on top of WebSphere. ABN AMRO deployed SOA suite of top of WebSphere as well. Looking forward, other areas that we've done well in, Identity Management, Telecom Italia in the quarter another SAP shop. They used middleware from Oracle to secure and streamline position that has uses across internal and external enterprises. They found they couldn't do that with NetWeaver -- we don't hear much about it anymore. Applications, the big development in the application industry this quarter was the announcement of Application Integration Architecture or AIA. What that is, it's a standard way to integrate all of our applications as well as customer and third party applications using standard middleware. There is a common object model, it is extensible by customers and partners. It is package integration package built-in standard BPEL. And this has been very helpful in explaining the customers, how standard [solo] technology can be used at an integration platform and to highlight the strength of our middleware. Several process integration impacts the shipping, more will come each month over the summer. Key wins in the quarter, ERP, the New York Metropolitan Transit Authority, Juniper Networks. Had a very nice CRM win in New York. New York was the hot area for us this quarter I guess. But we had a joint RFP from the New York City Housing Authority and the Department of Information and Technology. It was combined [bet] standardizing on Siebel. Schneider, a leading logistic services company, was a competitive win over SAP. Currently, we have the top 5 logistics services providers running Oracle applications. We continue to lead in high-tech with good wins at EMC, QUALCOMM and our [Arrow], and now surround the SAP strategy, where we use specialized products that extend the ERPs against our SAP accounts. We got some key SAP customers start to buy our products. So with demands up for instance Merck, Beckman, Texas Instruments and Bowater. [G-Log] for Circuit City on and on. Key industry wins i-flex at one, SunTrust and Federal Home Loan , and Telco Billing, Nokia, Siemens, Iridium and those cases would Amdocs, LHS, (inaudible) City University of New York, that was an important win. That's the largest university system in the country, it's a highly anticipated decision. It took over a year to do that. I had to visit there three times myself, we won over SAP despite the last minute discounting. All the other universities have been watching this decision. It's going to help us going forward. There were two major live events in the quarter as well. Existing customers that have deployed our technologies, have upgraded, that's important for the future sales but company's like Edan, Equifax, HP, Merrill Lynch , MetLife, Verizon Wireless, Dell, Sun and [I'll pull up]. In the on demand business finally, we launched in April, our upgraded CRM On Demand platform, so I want to spend a moment on that. Since that time, year-over-year, we've seen a 274% increase in the website traffic to our CRM On Demand home page. In the quarter, we had 74% growth in CRM On Demand revenue in the quarter recognized revenue, bookings were even stronger. Key wins in the quarter of CRM On Demand, Fidelity, Konica, Motorola, a large a large bank in Europe, and Automatic Data Processing were selected among other deals in the quarter that we will be closing this quarter. A large bank in Europe for instance in the large tech company in Europe. Every single deal I was involved in, the customer said the user interfaces is the comparable and skip for both products, both to you and the competition. That’s not going to drive deals in the enterprise anymore. Going forward what are they looking for? Integration to ERP, integration to on premise CRM for mixed environments, standard integration and use in BPEL, security, they don’t want (inaudible), a private database option, or a completely dedicated grid, we can offer both. And you know that I am appreciated the option of bringing it in house, even if we are running it, they change their mind later, they can run it onsite. We have over 2,000 telesales reps, in a very large field organization, we take this market seriously. We have momentum. Thanks a lot.

So, with that we have some time for questions, operator. Could you please call for questions?

(Operator Instructions) And we will take our first question from Heather Bellini with UBS. Heather Bellini - UBS: Hi. Good afternoon, everybody. I was just wondering, Safra, if you could talk a little bit about the size of the pipeline entering Q1 versus prior Q1 and last year in particular, the guidance is obviously very good. And was also wondering, if you could touch on your thoughts for how we should think about operating margins in fiscal year '08 and what the company is focused on in terms of margins. Thank you.

Sure Heather, nice way to put three questions in one, but we will go with that. The reality is high pipelines look fantastic frankly for Q1, going into Q1 it will be obviously exciting. It could be our largest Q1 ever, as you can see by our guidance, we feel that we are really going on all cylinders and the forecast is very, very, very significant. So, we feel very good about it. Well, we wouldn't have come up with this kind of guidance, frankly. As far as margins, you can see they continue to improve year-over-year. It's really a matter of scale and as the acquisitions get to scale, they start to show very significant profitability. The reality is that, it really all depends on what we buy, but consistently I expect to see the same level of margin improvement, if not more, for the company next year. Heather Bellini - UBS: Thank you very much.

Okay. One more question in there? Heather Bellini - UBS: Well, I just was wondering if you could comment on the pipeline this Q1 versus last Q1, given how well you outperformed last year?

It's significantly higher. I mean it's really... Heather Bellini - UBS: And that does mean Agile, right?

No, no. And, in fact Agile shareholder vote will be in the middle of July, and none of this guidance includes Agile at all. So, assuming that we closed, let's say sometime at the end of July, assuming a favorable shareholder vote which I do. It should be little bit higher, but Agile is a pretty small company compared to us. So, I think that the reality is the pipelines look extremely good. We took a brush through them and assumed lower closing rates than we usually use, and we still came up with this guidance. Heather Bellini - UBS: Great, thank you very much.

(Operator Instructions) And we'll go next to Brent Thill from Citigroup. Brent Thill - Citigroup: Thanks. Good afternoon. I wonder if you can just address the applications business. Europe looked very strong, the US looked fairly weak relative to last couple of years. You can comment in terms of what you saw in Q4, and what you are seeing in the pipeline for Q1 in the US?

Yeah, well, I think it's simply a matter of very, very tough comparison. The North American application business had a complete blowout in Q4 a year ago, which was a comparison we had to take this year. First of all, a very strong pipeline in Q1. So it's simply a matter of they had again spectacular growth a year ago and there was a tough comparison. But, again, we expect the North America to grow strongly in the Apps business in Q1. Brent Thill - Citigroup: And just a quick follow-up Larry? 30 acquisitions over the last three years, five in just Q4, can you just talk in a very high level in terms of your pace? Do you expect it to slow or continue?

I expect that the pace to continue. Brent Thill - Citigroup: Thanks.

And we'll go next to Sarah Friar with Goldman Sachs. Sarah Friar - Goldman Sachs: Good afternoon everyone. I am going to take you through, which is the database side. What do you think is the reasonable growth rate for the database license area, as you look into fiscal '08? And what is there that drives upside there., is it the 11g upgrade, is it more options being released, or is it some of these bundles that you are offering back into the SMB market against PeopleSoft -- probably all three?

Okay, well, first of all, it's really everything. It's just hitting on all cylinders we've got. We've got 11g. We've got new version of the middleware. We've got a lot of different bundles. We've got a number of new options available. So, the reality is that everything is just coming along.. And there is a very significant product pipeline coming through right now. And, overall just general adoption and customers making more significant commitment both to our middleware and to our database and to options and re-looking at some of the things we've got available to us. So, it really is a matter of customers committing and very, very strong product pipeline for sort of the foreseeable future, frankly. Growth rate should be pretty consistent with what you have been seeing frankly, and we are very optimistic and we don't think that necessarily maxed out.

Let me add to that. There are a number of new features coming out in the database this current fiscal year, which I think is going to help accelerate the database business itself. But keep in mind, our technology business has made up of database and middleware, and the middleware business while smaller than the database business is growing much, much faster also. Also, but the middleware business is probably getting to the size, that it is really losing the needle. So, if you look at our overall technology business, middleware is a significant percentage of it now. So, if you have a much higher growth rate in middleware that takes the whole technology growth rate up. So that's what you are seeing as the middleware business is getting to scale, the very fast growing middleware business is getting to scale. And the combined growth rate between middleware and database, therefore, is much higher than you might expect.

That is on the database side. Our lead over the competition is significant and we'll get larger on July 11th, that's when we are going to announce the 11g. So just remember July 11th, 11g. And so a lot of new features are coming out there, that I think will help us -- ISVs have also upgraded more than to take advantage of great technology that took several years, and I would say the shift to Linux is helping us as the customers moved to Linux. We are indeed the de facto standard there. In fact, the open source database is lost here last year on Linux. And then lastly, these applications are more data intensive. People are still generating a lot more data than they did the prior year, that's accelerating and it seems that it's going to be that way for the foreseeable future.

And Oracle Grid technology is still unique. IBM does not have any -- it does not have good capability for transaction processing. Microsoft has no great capability for transaction processing. We are the only ones who could deliver that full tolerance, that kind of scalability for OLTP with a great architecture. There is no one else -- for OLTP, the maximum number of computers you can have with IBM is 1, like IBM DB2, the maximum number of OLTP servers you can have with Microsoft is 1. The maximum number with Oracle is 128. Sarah Friar - Goldman Sachs: That sounds like we're looking at, least kind of double-digit type growth across that area?

Well, I think across our tech business, we're definitely in double-digit territory for the foreseeable future. At least that's what we believe. Sarah Friar - Goldman Sachs: Great that's very helpful. Thank you.

And we'll move next to Jason Maynard with Credit Suisse. Jason Maynard - Credit Suisse: Hi. Good afternoon. My question is really around the strategy with vertical applications. Database middleware growth obviously accelerated year-over-year. So, I am wondering, to what extent you could either quantitatively or qualitatively talk about how that APSS strategy is actually helping drive database in no more growth?

Well again, we'll begin a number of deals in the coming quarters, where really the driver of the transaction was a vertical application. Maybe in telecommunications, it was the billing and provisioning system. In utilities, it also might have been the bill-in system.In banking, it could have been internet banking and risk management. But when they make a decision for one of our vertical APSS, it greatly enhances our opportunity to sell other things that help -- ERP, CRM, middleware and database. So, we get a high level relationship with the customer. They really commit the core of their business to our software. Again it allows us to -- it allows a lot of other software to be dragged along with it. So, we think that’s going to enhance our growth in the years to come and that’s why we are going to expand the number of vertical industries where we have industry-specific applications, then we are going to do that with the acquisition. Again, in contrast, SAP strategy which is trying to build them all themselves.

We were talking about this last night with our GM of the communications business, (inaudible) and he's measured this, 80% of his deals include other Oracle products, typically CRM, database and middleware and sometimes BI. So, that’s becoming the standard as we get better at become a joint selling across the entire the product line, it does drag along a lot of other products. Jason Maynard - Credit Suisse: Give maybe the follow-up Charles, and do you have any idea what percentage of these customers are -- either new divisions or just new to Oracle applications, and maybe they have the database, but how many these customers ever bought Oracle APSS before?

They may have something on financials in some case, but that’s about it. And somebody large Telcos and what this does is a whole of other suite of application that we couldn’t tell we before, we couldn’t talk to the buyer of these application to a different buyer and now we are just meeting new people, and of course it drags along everything else. Jason Maynard - Credit Suisse: Okay, thanks you very much.

I think the biggest example of this question might be in the past as the relationship we established with Wal-Mart, again we had a corporate relationship with Wal-Mart for number years. It wasn’t buying very much from us, and really it was our retail vertical that got us into Wal-Mart and then subsequently we may be able to sell other technology and other applications.

I didn’t mention it but we did yet another day with Wal-Mart this past quarter.

And our next question comes form Adam Holt with J.P. Morgan. Adam Holt - J.P. Morgan: Good afternoon and congratulations on the quarter. I wanted to ask you couple of I guess one, sort of two-part follow up question on the margin expansion store going forward. As we think about fiscal '08 unfolding, should we expect the majority of the margin expansion year-on-year to happen sort of in the back half of the year, and may be thinking more medium term, you talked about as 50% operating margin target. Is that still the right kind of medium term goal or has the acquisition strategy changed that?

Well, let me grab the second half of the question and let Safra talk about the seasonality of the margin expansion. The 50% margin growth target which I mentioned again, a long time ago we set the target of 40% which we met, and we thought we were on our way to 50%, but the fact is we decided not to go for -- with a slowdown our margin expansion and accelerate the expansion of our top line, total revenue. So had we stayed -- had we not made all these acquisitions, we think we could have expanded our margins even faster, but instead we decided to expand our overall profitability, total value profitability and that meant we had to expand the top line. So, as we've acquired these other companies, our margins are now improving more slowly than they otherwise would have. So, I think as long we are on a track to acquire at this approximately this rate, our margins, we think they will grow, that we've forecasted they are going to grow this year. But I think 50% is not in near term target.

Okay. So, it remains our target overall and it's just we are also obviously a much bigger company and we have some headwinds as Larry mentioned either from the acquisitions when they are not at scale or when we haven't fully closed from like Hyperion where we haven't done the legal entity mergers in parts of Europe because of legal restrictions. So we don't have the cost savings that we would otherwise have this quickly. The margin expansion usually does occur at the later half of the year, only because Q1, even though it has most of the expenses, because the sales force is in place and the R&D budget is all being spent. But in general the revenues are obviously smallest in Q1, so you see, usually a bigger path in Q4 and at the second half the year. Though this year, I’m a rather optimistic on when we should be showing you margin expansion and I would expect that, again it's very dependent on if we were to do any acquisitions or not in the next year that we would see it earlier than we did this year.

Okay, let me emphasize our target is still at 50% margins. However, it's going to happen more slowly than I originally envisioned, because we are growing the top line at a much higher rate, than we had really planned when we talked. We talked about that so we are more focused on delivering that 20% per year earnings growth. Adam Holt - J.P. Morgan: Terrific, thank you.

Yeah.

And we’ll go to Tim Klasell with Thomas Weisel Partners. Tim Klasell - Thomas Weisel Partners: Yeah. Sort of a follow up to the last comment, you are ahead of your 20% bottom line growth. Does that change the way you are looking at acquisitions. Over the last set of acquisitions, you have always been sort of very focused on accretion. Does this give you a little bit of breathing room to maybe do something that’s sort of a longer term strategic move and if you guys aren’t thinking about anything like that?

Yeah. We love accretion.

Yeah. We are very, it’s just because we are way ahead, it doesn’t mean we are going to take a nap here. So, the plan is that 20% is not really an average for us. It’s not the way we look at it. So our overall goal is that, is the 20% in the annual rate, and the fact that we are ahead is not necessarily, is not an excuse for not hitting it next year. Tim Klasell - Thomas Weisel Partners: Okay, very good, thank you.

We'll go next to Peter Goldmacher with Cowen & Company. Peter Goldmacher - Cowen & Company: Hi, thanks, Safra a question for you on the M&A you are doing, can you walk us through the typical first 18 months of a deal and the major milestones you guys pass through as you do an acquisition. So where do the big costs savings come through, how you guys have realized that over a year and half after the deal gets done?

Sure, well, there are two things going on, there is not only cost savings that revenue increases and it really doesn't usually even take 18 months, right at the beginning obviously we are running completely in duplicate meaning we've got a lot of duplicate G&A and we've got just duplicate processes and though we change our business practices literally overnight the entities aren't merged. And, so it can take a little while depending on the region for some expenses to be reduced. The other thing is though as one of the things you need to know is -- it's also very dependent on the acquisition, because in many cases R&D spending and sales and marketing spending we actually increase it beyond where the company was, because of the fact that we are so focused on really getting leverage -- getting leverage around the world. Many of these companies do not have large sales channels outside the United States, and so there is a period where we are actually increasing the spending on things like more sales channels more sales men around the world. The other thing is, I want to remind you that our revenue recognition polices and I think this is true just at least for the 30 deals I have seen is more conservative than any other company around and clearly any of the ones that we've acquired and as a result some of these acquisitions don't actually show up with revenue for us that we count as revenue and then we show you for a little while. So though we have the expenses, sometimes the revenue can be delayed by as much as a year. With something like Hyperion, we obviously don't expect that, but with the smaller ones we do see that. So, I think that it's really in full contribution mode depending on the deal, anywhere from three months to 15 months is sort of a range. With the bulk of them contributing, versus being a headwind to margins within about eight or nine months. Peter Goldmacher - Cowen & Company: Okay. Thank you very much.

We’ll move next to Kirk Materne with Banc of America. Kirk Materne - Banc of America: Yes thanks very much. Recognizing you all had a tough compare in the APSS business in the US. I was actually just curious what went on in Europe this quarter because that had a difficult compare as well and it still put up very strong growth numbers. Can you just give us some color and whether that was some of the historical ERP products or you start to see some of the vertical strategy take off in that region as well? Thanks.

There is a delay usually on the verticals, it's just because whoever we buy, they normally don't have coverage outside of the U.S. on these slow verticals. And so that's one of many things we add to these company's volumes, buying this distribution obviously we want to change its integration and so all that takes a little time. And, so, you are right a lot of that has now starting to kick in, in Europe as we've put distribution and this is not the easiest distribution to bill because we have an specialist model, we want people who are specialized in each of these industries. So you have to find the right people but once we've done that, it starts to kick in. And then overall I think that we just have better execution in Europe than we've had in a couple of quarters I think they just did a great job in the quarter. Kirk Materne - Banc of America: Okay, thanks very much.

And Peter Kuper of Morgan Stanley, your line is open. Please go ahead. Peter Kuper - Morgan Stanley: Great, thanks very much. This last quarter guys, we heard about a number of deals and SAP shops, a number of them that are still SAP but that are buying more Oracle solutions et cetera, so, kind of a surround SAP strategy. Give me a little color on how that is working, and do you expect this to be a continued policy that are going to get more and more dollars out of existing SAP accounts?

Yeah, it's working beautifully. It's still evolving, I would say. I would say early on when we started buying companies that allow these SAP customers we are using, there was a little nervousness. Will you support it? Are you going to make it integrate with SAP? Well, I think as time is going on, our performance speaks for itself and it's logical. I tell them look it's in our interest to make it integrate well with SAP. We want to coexist and we want to be here and that's not realistic for you to rip SAP out. If you spent billion dollars putting it in, our customers don't spend that much, but there are few. So, that's why this AIA announcement is so important because that validates. Okay, they are trying to do something formal around integration. We are taking this seriously not only with our own products, but with third-party products including SAP. So, not only do we say we don’t really mind integrating the SAP, we are going to do it well and be good at it. And so once they hear that pitch and they have seen what we've done, they have gotten a lot more comfortable with it. So I would say that the transition to today, a lot of them are just comfortable, okay, instead of having SAP and 30 other little products surrounding it, I have a two-vendor strategy, SAP and Oracle. Oracle will take care of everything else. We are taking care of the interesting stuff.

And let me just second to what Charles said. Maybe if that all we had was HR events, it was SAP and PeopleSoft, the customer might have considered well, let's see that. I believe it's going to go all SAP and replace Oracle HR or MES. But now a typical customer might have G-Log, Demantra, Siebel and people would then call PeopleSoft and Hyperion for connecting, and it’s very clear we are not going to replace all of those products, it's just not feasible. So the customer exactly to what Charles said are going to a two supplier strategy, and maybe SAP for internationals and supply chain, Oracle for everything else and relying on Oracle, not SAP to make all the pieces work together. And that's absolutely key to us, and the key to our middleware technology. Our retail technology or integration technology, out of our Fusion Middleware to tie all of these pieces together. And we are seeing them choose our middleware for integration. Again to link, as opposed to NetViewer they are picking our middleware to link all these pieces together. And we've got a very good relationship with these customers and we are not able to sell applications, new applications and the customers that historically has been on the SAP side of the ledger, it wouldn't talk to us about new applications, but they are now coming to us and since we are party as a dual vendor strategy, they are buying new applications from us as well. Peter Kuper - Morgan Stanley: And on that integration theme, is that -- Charles, you mentioned to me on-demand CRM and the integration of ERP et cetera, but also kind of dedicated hardware, is that kind of a big driver success, that you are seeing out of the pieces here?

It certainly is becoming more important, particularly in Europe, and in financial services, because there are certain laws that speak to data privacy and where the data can reside, how it can be commingled and they are very nervous about that. So we can give them options. You can have it on-site at your place. You want to do it at partners. You want to do it out of country. There is a lot of different options that we can offer people, and sales force only has one single option and that's commingling all the database in the US.

Yes, multi-tenant is really a disadvantage, if the customer is very sensitive about data privacy issues. And multi-tenant is a convenience for the supplier software service, but not terribly desirable for a bank, especially the international bank. And our dedicated database, either on premise or a outside of the US proved to be very attractive options for some of these customers and lot of these could be put effectively against sales force at the high end of the market.

I talked to a bank recently with their board of directors because of the PATRIOT Act in the US and there are nine US banks on the [treat]. They cannot have data residing in a data centre in the US. So they had no choice. So we are basically the only choice if you don't want to decide that. Peter Kuper - Morgan Stanley: Got it. Thanks.

So operator, we have time just for one more question, please.

And our last question will come from John DiFucci with Bear Stearns. John DiFucci - Bear Stearns: Thank you. Safra mentioned, I think in the press release said the strategy is working and that's apparent from the results here. But I have a question on the environment. Are you detecting any pickup in spending even if it's on a regional basis? I mean we are hearing some things out of Europe from different other vendors. And secondly, I know you are not going to tell this is forever, but can you tell us what you are assuming for the Hyperion license contribution in the first quarter?

I don't know if you guys wanted me to take. We don't actually break it up for Hyperion because we just don't do our forecast that way. The way these things finally fall out, we've taken a very conservative view for what we would expect from Hyperion anyway, simply because we do not have the experience with the team at this point and so we are not quite sure of the environment. So we have not assumed very much for Hyperion, frankly in this forecast. So we have got bunch of different ways that we get to our forecast and it's not always broken up exactly this way. So that's not a number I'm going to start giving up guidance by product line. AS far as the, I don't know if you guys wanted to take the economy question.

Yes. Well, I would just say, and certainly our pipelines to just that things are good for us, but our pipelines have been smaller for quiet a while now and our competitors have gone up and down. So it's hard for us to extract latency, everybody is going to do well, but we certainly feel like we have good prospects going forward.

Yes, we are not detecting any macro issue for us at all. John DiFucci - Bear Stearns: Okay, thank you

Great. So, thank you everyone for participating in today's call. We will have --

I need to do… I am sorry, go ahead.

I am sorry, operator, go ahead.

That concludes our question and answer session. I will turn it back to you.

Great. Thanks. So, a telephone replay is going to be available for 24 hours, and that replay number is 719-457-0820 with pass code 4727086. You can also access the webcast replay on the Oracle Investor Relations website and that replay will be available to the close of market on July 3rd. So thank you, and with that I will turn it back to the operator to close.

And ladies and gentlemen that concludes today's call. Thank you for your participation. You may now disconnect.