Ken Bond Safra A. Catz - President, Chief Financial Officer and Director Mark V. Hurd - President and Director Lawrence J. Ellison - Chief Executive Officer, Co-Founder and Director

Kash G. Rangan - BofA Merrill Lynch, Research Division Jason Maynard - Wells Fargo Securities, LLC, Research Division Philip Winslow - Crédit Suisse AG, Research Division John S. DiFucci - JP Morgan Chase & Co, Research Division Adam H. Holt - Morgan Stanley, Research Division Brent Thill - UBS Investment Bank, Research Division Brad Reback - Stifel, Nicolaus & Co., Inc., Research Division Brendan Barnicle - Pacific Crest Securities, Inc., Research Division

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 Ken Bond, Vice President of Investor Relations, Oracle. Please go ahead, sir.

Thank you, Erin. Good afternoon, everyone, and welcome to Oracle's First Quarter Fiscal Year 2013 Earnings Conference Call. A copy of the press release and financial tables, which include a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. On the call today are Chief Executive Officer, Larry Ellison; President and CFO, Safra Catz; and President, Mark Hurd. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements made today. As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our most recent reports, including our 10-Q and 10-K and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price for stock. And finally, we are not obligating ourselves to revise our results or publicly release any revisions of these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra. Safra A. Catz: Thanks, Ken. I'm going to focus on our non-GAAP results for Q1. I'll then review guidance for Q2 and turn the call over to Mark and Larry for their comments. Before I start, I want to point out a couple of things about the quarter's report. First of all, because the U.S. dollar strengthened over the last year, our as-reported results actually partially masked the underlying strength of our business. During the first quarter, currency movement reduced new license revenues by 5%, total revenues by 5%, net income and earnings per share by 6%, which is $0.03 per share compared to Q1 of last year. So I'll focus on constant currency growth rates, unless I state otherwise. Secondly, as we offer cloud services, which combine our applications and technology products in a service, the historical line between our technology and application results is less relevant. So we will now disclose a combined new software license and cloud software subscription revenue number, though we will break out the cloud revenue number for you. Expenses will not be broken out, because the same sales organization and the same development organization are the bulk of the expenses in both our on-premise software and cloud offering. Okay. Now for the quarter. We are pleased with our software results as new software license and cloud subscription revenues were $1.6 billion, up 11% and building off a solid base of 11% up last year. Cloud revenue for the quarter was $222 million. In addition, we continue to see broad-based strength as the quarter was balanced with new license and cloud subscriptions growing 14% in the Americas. That's on a GAAP basis -- actually, 16% on a non-GAAP basis -- 12% in APAC, while Europe saw growth of 1%, on top of 15% growth last year on a GAAP basis. The quarter was also not dependent on any large deals. Software license update and product support revenues were $4.1 billion, up 8% and up 1%, sequentially. In U.S. dollars on the income statement chart, it appears that support is down sequentially, but this is entirely a result of currency fluctuation as support attach and renewal rates continue at the usual high levels. Hardware system products revenue was $779 million. Engineered systems continue to grow at triple digit rates. For the company, total revenue for the quarter was $8.2 billion, up 3% from last year. Our non-GAAP operating income of $3.6 billion was 6% higher than last year as our operating margin expanded to 44% from 42% last year. We still believe there remains a lot of leverage in our business model. The non-GAAP tax rate for the quarter was 23.4%, nearly on top of the guidance rate I gave last quarter. EPS for the quarter grew 11% in U.S. dollars to $0.53 on a non-GAAP basis. Without the negative impact of currency, our non-GAAP earnings per share would have been 3% higher at $0.56, up 17%. Our GAAP tax rate was 24.7%, which was higher than my guidance for last quarter. On a GAAP basis, EPS for the quarter was $0.41 in U.S. dollars. And without the impact of currency, GAAP EPS would have been $0.44, up 24%. Now our GAAP earnings per share included $306 million minimum payment related to our lawsuit against SAP, which is their payment to us, which we exclude from our non-GAAP numbers. Operating cash flow increased to a record $14 billion over the last 4 quarters, with operating cash flow increasing this quarter to an all-time high of $5.7 billion, up from $5.4 billion last year. Free cash flow grew to a record $13.4 billion over the last 4 quarters. We now have nearly $32 billion in cash and marketable securities. Now as we said, we remain committed to returning value to our shareholders through our technical innovation, acquisitions, stock repurchases, prudent use of debt and the dividend. And this quarter, we increased our share repurchases again as we repurchased 104.2 million shares for a total of $3.1 billion in the quarter. Over the last 12 months, we've repurchased nearly 300 million shares for a total of $8.2 billion. And the Board again declared a quarterly dividend of $0.06 per share. Now to the guidance. New software license and cloud subscription revenue is expected to range from 6% to 16% in constant currency and 5% to 15% in reported dollars on a non-GAAP basis. On a GAAP basis, New software license and cloud subscription revenue is expected to range from 5% to 15% in constant currency and 4% to 14% in reported currency. Hardware product revenue growth is expected to range from a negative 18% to a negative 8% in constant dollars and reported currency. As a result, total revenue growth on a non-GAAP and GAAP basis is expected to range from 1% to 5% in constant dollars and 0% to 4% in U.S. dollars. Non-GAAP EPS is expected to be somewhere between $0.59 and $0.63 in both U.S. dollars and in constant currency, up from $0.54 last year. GAAP EPS is expected to be $0.45 to $0.49 in U.S. dollars and in constant currency. Now this guidance assumes a GAAP tax rate of 24% and a non-GAAP tax rate of 25%. Of course, that may end up being different. With that, I'll turn it over to Mark for his comments. Mark V. Hurd: Thanks, Safra. Just a couple of quick comments before I give it to Larry. Software, we got to a solid start with 11% CD growth. It's a little better than we expected. Double-digit growth in the U.S., Latin America and Asia Pacific. In cloud, we will add some key cloud wins in both CRM and HCM, including Accenture, Adobe, Airstream, Barnes & Noble, Cisco, Colgate-Palmolive, Cox Communications, DIRECTV, Kraft Foods, Macy's, NVIDIA, Proctor & Gamble, Sandia National Labs, Schneider Electric and Telstra. Now I don't usually read that list because it takes a period of time. But today, I wanted you to know that this is just tremendous customer acceptance that we're seeing, and our pipeline and our team are still ramping. So I wanted to make sure you just had some flavor for the kind of acceptance we're seeing. We expect we'll be at or over $1 billion run rate next quarter, and we believe we have the people and the services to win a lot of business in the cloud. Let me go to Engineered Systems. It was another strong, exit [ph] quarter, with revenue more than doubling last year. We had great Exadata wins at Verizon, Nissan, Petrobras, Bank of America and GlaxoSmithKline. Exalogic had a great quarter, with unit sales nearly 3x last year. Wins at Accenture, Hutchison Global, United Healthcare, Agilent and CalPERS. And Exalytics had a strong ramp, with incalculable growth, obviously, since we introduced it late last year, but with great wins at the state of California, Macy's, Praxair and Toshiba. On other hardware. We have the hottest UNIX box in the industry with the SPARC T-Series. We grew double digits, and we expect to see continued momentum Q2, Q3 and for the rest of the year with this machine. In our verticals. We continue to see strength in our industry focus solutions. We had double-digit CD growth again in our vertical industry businesses. We've ramped our headcount in this area, and we expect they will have another strong year. Now as an FYI, this week, we introduced the Oracle banking platform. It's one of the most significant product releases from our Financial Services business unit. As it relates to people, as we discussed in Q4, we realigned our sales force last quarter and entered the year with all of our people having a boss, a territory and a comp plan. They're in the market now and growing their pipeline as we speak. In closing, sales headcount is up year-on-year, and our pipeline growth reflects that. Expect us to continue to be aggressive in the cloud, driving our Fusion Applications solutions. We've been aggressive in hiring up in Business Analytics, and we believe that combination with our Exalytics solutions, we're extremely well positioned there. We expect that Engineered Systems, ZFS, our SPARC T-Series will continue to see strong growth throughout the year. With that, I'll turn it over to Larry. Lawrence J. Ellison: Thank you, Mark. Let's see. A week from Sunday, at Oracle OpenWorld, we'll announce the addition of Infrastructure as a Service to the Oracle Cloud. With that addition, Oracle will be providing its customers with all 3 tiers of cloud computing: Software as a Service, Platform as a Service and Infrastructure as a Service. Our SaaS offering includes complete application suites for CRM, HCM and ERT. Today, Oracle delivers more SaaS applications than any other cloud service provider in the world. Our PaaS offering, or Platform as a Service, includes the most popular database in the world, Oracle, and the most popular programming language in the world, Java. Those 2 industry-standard platform services, combined with our new social network service platform, gives our customers the tools they need to rapidly develop modern applications that run in the cloud. Our new Infrastructure as a Service offering provides secure, virtualized, compute and storage services. In the Oracle Cloud or -- and this is very important, an identical infrastructure service installed in our customer data center as an Oracle-managed private cloud, customers can easily move their applications from traditional custom and packaged applications to our modern Fusion SaaS applications, back and forth between the Oracle Cloud and their private cloud. Please join us at Oracle OpenWorld for all the details of our new Infrastructure as a Service offering.

Thank you, Larry. Operator, we'll please move to the Q&A portion of the call.

[Operator Instructions] And we will go first to Kash Rangan of Bank of America Merrill Lynch. Kash G. Rangan - BofA Merrill Lynch, Research Division: I guess a question for you, Mark. The company has had an increasingly diverse product portfolio. You've got some of the faster growth products like Exa series and the cloud apps. But given the diversity in the landscape, how do you think about your sales and go-to-market strategy and getting that balance between the core database applications business and finding the right amount of growth for all these exciting new opportunities? Mark V. Hurd: Yes. Kash, I'll start, and Larry may want to add. I mean, we focus our sales forces, we specialize them so there's actually a sales force that's focused exclusively on selling database, our database offerings, and that's combined with Exadata. So you would find the same thing in Middleware. They would be focused on selling Middleware, and they'd be focused on selling Exalogic in combination with Middleware. And that would go on through our product lines. So our sales forces are very focused. So to your point, as we introduce new products, we bring a sales force typically focused along with that new products. So the potential distraction that you may have described is actually eliminated. We keep them very focused, we train them as such and we point them directly and line them up against our secular competitors. Lawrence J. Ellison: Yes. I mean, I think that's the point. We've reorganized our sales force in Q1-- before Q1 so that we had a dedicated HCM sales force. So if HCM in the cloud becomes very, very hot, we can add reps and add capability in the HCM sales force without distracting -- and the database sales force, it's business as usual. The Middleware sales force, it's business as usual. But again, we'd be adding a lot of reps in HCM, and that's what we're doing. We're adding a lot of reps in service as we move our RightNow service offerings in the cloud around the world and sell it more aggressively in Asia Pacific and in Europe. Same thing with the sales application, our new marketing applications, which are socially enabled. Those are the applications that listen to what people are saying about your product on Facebook, what people are saying about your product in Twitter. It provides that insight to our customers and lets the customers -- then respond and take advantage of those insights. So we have separate dedicated sales forces lined up against our secular competitors that we can expand as the opportunity expands. Mark V. Hurd: Yes, Kash, I'd add to it. There's also metrics, quotas, pipelines, all the instrumentation is lined up exactly the way Larry described. So we have the ability, any day if you want, to measure our progress, our pipe, our headcount in any geography, in any country, on any specialized product line. So pretty effective model.

And we'll take our next question from Jason Maynard of Wells Fargo. Jason Maynard - Wells Fargo Securities, LLC, Research Division: I have a question for Larry. Oracle's been through many technology platform shifts. And obviously, there is a big one with 11i E-business Suite last decade. Given that you're now rolling out Fusion Cloud Services coming to bear, it'd be great to get your perspective on what you can draw, if you will, from that experience, what you think is different and what are the key things that Oracle has to do to win in this round with the cloud market? Lawrence J. Ellison: Well, as you know, a lot of companies have a difficult time adapting to the next generation of technology. And those with the most are also the ones with the most to lose. You have to be willing to change the way you were doing business in the past and adapt to the new opportunities and exploit the new opportunities. So we move very -- well, we decided -- we actually decided, almost 7 years ago, to develop our Fusion Applications, a new generation of applications, which were -- there was no term called cloud then. It was simply called SaaS. So we decided to offer those new applications as a service. We started developing it 7 years ago. Now that we actually them in the marketplace and, for example, HCM is very -- Fusion is very hot. It was hard to build, and it's very hot right now. Not only do we have that product available, we now have to reorganize our sales force, which was -- any change is difficult. We had to reorganize the sales force and get -- have a dedicated sales force focused on HCM. So you have to first recognize that the change is coming. I think we did that 7 years ago with the development of Fusion Applications, and then do the really hard thing, which is, say, okay, guys, these are our old competitors. These are our new competitors. This is what we used to push. Now this is what we're pushing now, which is a cloud service against this specific secular competitor. Retrain your salespeople, add salespeople, specialize your salespeople and focus on these new market opportunities. There's a lot of inertia in a big company. We have 120,000 employees, and it takes a lot of management focus to move people from business-as-usual to pursue these new opportunities. That means retraining and doing things differently. It's not easy, but it's essential. We've done it before. We've done it before successfully. In that sense, this is no different. It's just that we're a lot bigger than we used to be.

We'll go now to Phil Winslow of Credit Suisse. Philip Winslow - Crédit Suisse AG, Research Division: I know you don't break out apps versus tech anymore, and you have obviously just commented on your apps strategy. But I was wondering if you could spend some time talking about the trends that you're seeing in the database business in terms of just competition, growth in the market, et cetera? And obviously, Database 11g has been a huge release, but it's getting a little long in the tooth -- there's obviously been growing chatter in the industry about a pending 12c release, which, I'm assuming, the "c" is for cloud. So Larry, wondering if you can also just talk about just future innovations within database and also what that means, just vis-à-vis your competition. Lawrence J. Ellison: Well, our big competitor in database and -- in fact, our big competitor in infrastructure, database, middleware, servers is IBM. And we're announcing Oracle 12c at Oracle OpenWorld. So we're rolling out the new version of our database, which had some very exciting specific features for the cloud. So again, if you will -- I'm not sure I want to use the multi-tenant term, but it's kind of -- these have been called multi -- we have a thing called plausible databases, which allow multiple tenants to securely coexist in the same database and, of course, submit them. And then that's covered with virtualization. So we take the belt and suspenders approach to security and make sure your data is isolated and private and safe and secure. So we've done a bunch of work on the database for the cloud. We'll see that -- as I say, that's coming out, announced at OpenWorld and coming out December, January, February next year, in the next few months. That's a very, very big deal. The primary competitor, IBM, I believe, continues to lose share to us every quarter, as does our second competitor, which is SQL Server. After SQL Server, we have some interesting specialized competitors like Teradata. And we believe that Exadata is doing a pretty good job of competing with Teradata. So we don't do lots and lots of head-to-head competitions with Teradata yet. I think we're going to be watching that business, and we're going to be focusing on competing more aggressively with Teradata than we have in the past. But we think we have a better product than our competitors. And all statistics we see is we continue to take share, especially in our larger customers.

And we'll take our next question from John DiFucci of JPMorgan. John S. DiFucci - JP Morgan Chase & Co, Research Division: I have a question for Mark. Mark, not long ago, we heard you talk about how selling Engineered Systems has been somewhat of an evangelized sale, requires an IT organization to think differently in regards to architecture and even personnel. But you've also -- we heard you say, and it makes sense, that it's a better solution. With a lower total cost of ownership, it's going to happen. Now I'm not trying to say -- this business has done well, and you've talked about how it did this quarter, and it sounds like it's growing and it's doing really well. But I mean, personally, my team thinks that it -- there's even a brighter future here. How close have we gotten to when customers feel like they're ready to broadly buy Engineered Systems, and especially Exadata and buy in mass? Mark V. Hurd: I'll try to give you a baseball analogy. I think we're in the first inning. So as you described these numbers -- and I agree, John, with your characterization. I mean, these are great numbers on a -- for a start of a product, et cetera. But relative to the magnitude of the industry opportunity, you've got a $60 billion -- $55 billion to $60 billion server market, and that market actually doubles when you include the storage. And you have to include storage to really look at the magnitude of what's in front of us from an Exadata perspective. And you have to add what we can do with Middleware and apps with Exalogic and so forth and so on. So this really is what you described. Now what you see us doing, and I read off some very, very large, well-known logos that are now adopting the technology. But we're winning a project at a time, and we're gaining more and more architectural wins as we go. And so, John, we just scratched the surface with this. And that's why, to Larry's point, we specialize our sales force, why we train them, why we focus them the way we do. And just the point being, do I think there's huge upside in the overall Engineered Systems business? Yes.

We'll take our next question from Adam Holt of Morgan Stanley. Adam H. Holt - Morgan Stanley, Research Division: My question is about Fusion. Now you've been in the market for a little while. To the extent you're comfortable sharing any details with respect to customer adds, where are you seeing demand from a module perspective? And if you could, what the mix is or general mix between on-premise and hosted, just a general flavor for the adoption. Lawrence J. Ellison: I'll start with Fusion. The hottest part of our Fusion Suite is HCM, and we're seeing the adoption broadly being in the cloud. Fusion is very interesting. It can run on-premise, run in the cloud. And now, with it's -- our latest announcement, it can run on a private -- an Oracle-managed private cloud in your data center. So -- which is kind of midway between -- it's not on-premise because we take responsibility for managing it. We own the server. We run it. It just is behind your firewall in your data center -- the cloud. But overwhelmingly, the choice has been to put these HCM applications in the cloud. Mark, you wanted to add to that? Mark V. Hurd: Yes. I think, to Larry's point, we had very strong HCM wins in the quarter. I mean, remember, we sell HCM by module. So you've also -- you've got a recruiting app, we've got the ability to get a work-based compensation app. We've got a core HR app, but the wins were tens and tens and tens of wins in HCM. We're seeing the same ramp now on the sales side. So sales automation really with the product is not as mature as HCM, but we've now released it. It's in the market. We now have references. And we had a very, very strong start, and I tried to give you some names in that -- in the early part with sales automation. But again, all of those are SaaS implementations in the quarter. You also know RightNow. We actually go to market by service automation as well, and particularly outside the U.S., which was a key issue for us, was -- RightNow was very strong domestically. We had a strong RightNow quarter outside the U.S. as we began to take that product around the world. So it's very strong right now. Lawrence J. Ellison: [indiscernible]. So HCM has been the #1 Fusion offering, now closely followed by sales. The interesting thing is we're seeing our specialized competition from both salesforce.com and Workday and seeing virtually no SAP in either of these areas.

We'll go now to Brent Thill of UBS. Brent Thill - UBS Investment Bank, Research Division: Larry, there's increasing attention around Social for the enterprise, and I was curious if you can give us your view and your role on monetizing this trend and how you think it plays in your cloud strategy. Lawrence J. Ellison: Well, last year, we announced basically social network services as a part of our cloud platform. Now there's 2 ways to look at Social: You can look at Social as a separate application. In other words, as a SaaS application, which our friends at salesforce.com, that's the way they put it in their architectural slide. We actually put Social at the platform level. It's really a tool that allows you to socially enable any application that you're building. So you would use Java, the Oracle database and our social network services to build a modern social application with social characteristics. So when -- we think it's a tool. Social is not an application, a stand-alone application. Rather, it's integrated with the platform and all of the applications you build on top of that platform become social. What I mean by that is then they all -- you can communicate. If you're -- one group is using an HR application, another group is using a sales application. Those are both sales -- social applications and the HR people can communicate directly with the salespeople and so on. So we put it at the platform level as a tool, not as a stand-alone application level. And we can think that's -- is that architectural difference is a big deal. Brent Thill - UBS Investment Bank, Research Division: I know you are going to say more at the user conference on this as a dedicated session. How far do you think this is from your ability to monetize this? Lawrence J. Ellison: I think we're monetizing it now. Again, we're very happy we're in the market on the Fusion side. So all of the -- again, all of the -- do you mean specifically the social network services? Or just cloud applications? Monetize what? These are [indiscernible] which you -- what you're asking. Brent Thill - UBS Investment Bank, Research Division: Your Social Platform. Lawrence J. Ellison: All right. Well, again, the Social Platform adds value to all of our applications. So it adds value to our HR -- our HCM applications. It adds value to our sales applications. It adds value to our service application. So we're not measuring Social as a separate stand-alone thing. Rather, it's adding value and allowing all of these other applications to integrate and communicate. So we're monetizing it now. It's made our HCM applications more competitive against Workday. It makes our sales applications more competitive against salesforce. So we sell more of those. It's more of a differentiator and advantage. So that's one part of it. Then there's this other part of Social. Again, it's a big area. In marketing, social marketing, Social kind of at the center of the marketing applications where we listen to the Twitter feeds, we look at the Facebook posts, we let companies analyze what people are saying about their products and services in other social networks. And then we present that information and insight to them and let them -- and you can take action on that. For example, it comes directly out of our social analysis tools and let's -- and you can feed it directly into service, into our RightNow service. Or we have tools, social tools that allow you to build a Facebook presence, a store on Facebook. So it makes it -- so marketing, modern marketing, if you will, is very social-centric. But that's not the only place we're using social. We're using it across all of our apps. But I suppose it's most conspicuous in modern marketing.

And let's take our next question from Brad Reback of Stifel, Nicolaus. Brad Reback - Stifel, Nicolaus & Co., Inc., Research Division: For Mark. Last year, Mark, you guys hired over 3,000, broadly speaking, new sales heads. I think 500 alone in 4Q. How should we think about the ramp of those salespeople? How is it progressing? And then number two, when do we really start to see the impact on the growth rate of the overall business from those people? Mark V. Hurd: Well, you're seeing it. And I think when you look at our Q1, when you look at the guidance we just gave you on Q2, we have more people in the field than we had, to your point. We have certain areas we're continuing to hire. We're very focused in the areas Larry described around our Fusion apps. We're hiring in Business Analytics as well still today. Now many of those people that we started in Q1 and sort of mid-Q2, it's typically a 9-month, 12-month ramp, and that's why I made the comments earlier about the growth in our pipeline. And that's how we measure it. We measure it by rep. We know when you came in, we know your tenure, we know when you got trained, we know what your territory is and we can align your pipes directly to that territory. So you're beginning to see them feather into the productive category. As we go quarter by quarter, of course we get more productivity out of those folks that we hired.

And our final question will come from Brendan Barnicle of Pacific Crest Securities. Brendan Barnicle - Pacific Crest Securities, Inc., Research Division: Mark, on the hardware side, you guys have been transitioning to Engineered Systems and away from the commodity server business. When does that bottom out? And how do you get confidence around that so that we get a consistent growth profile there? And then secondly, just quickly on margins. Good improvement there. What's your expectations as those go forward? And what's your biggest leverage point going forward? Mark V. Hurd: I'll start. Listen. I think we're going to go -- as we talked about earlier, we'll see growth in Q4 of the overall business in hardware. We're very focused right now because we've got hot products, as we described with the T4. We're aggressively taking it to market. And so for us, it's in our best interest. And in the hardware business, if you just think about the products that we've released over the course of the past 18 months, Exadata, Exalogic, Exalytics, T4, ZFS, where we release new products, we drive growth. We gain share. I think you should expect that trend to continue. We've been -- in the places where we don't have differentiation, x86; or where we haven't refreshed, for example. You don't see that growth. To be very frank, our margins are going up, and our market positions in the markets that we care about are going up as well. And one last point I wanted to make, and I'll turn it over to Safra on operating margin, I want to make sure I was clear on the Engineering Systems point and to John's earlier question. I want to make sure you have context for this. Most of our customers are growing their data at 35%, 40%, 45% per year. That's today. That's before some of these Big Data applications that you hear about continue, continue to evolve on the scene. Most of our customers spend $8,500, $9,000 a terabyte to store the data that I described. Most of our customers spend 15% to 20% of their IT budget on storage. When you look at what we can do with Exadata and the compression we can bring to that very data set, in many cases, 10x means I had a petabyte. After we're done, you've got 100 terabytes. And the economic impact that has on our customers and any customer that's got an Oracle database estate is eligible to see those kind of opportunities. It's the reason we are so focused and you hear us talk so much about the opportunity with Engineered Systems and it's opportunity to change the landscape of the infrastructure and our customer's business. So the focus is going to be on driving the new products and driving growth as we described. Safra A. Catz: On the margin side, there's really no reason why we can't get to the pre-Sun operating margins very soon. We're clearly on our way. We have the highest operating margins of the software companies in general. And even though we have a $3 billion, almost $4 billion hardware company buried in us, we will get to our pre-Sun, pre-hardware operating margins very soon. And clearly, we took another step in that direction this quarter. And as volumes increase in hardware, which they will, that will help also. But the business has -- otherwise, is just extremely strong.

And that concludes our question-and-answer session. I'll turn it back over to you, Mr. Bond, for any additional or closing remarks.

Thank you, Erin. A telephonic replay of this conference call will be available for 24 hours. Dial-in information can be found in the press release issued earlier today. Please call the Investor Relations department with any follow-up questions from this call. We look forward to speaking with you. Thank you for joining us today. With that, I'll turn the call back to the operator for closing.

And once again, ladies and gentlemen, that concludes our conference. We thank you for your participation, and you may disconnect.