Software company Oracle has reported its profits are up by 11 per cent as its SaaS division to generate $1 billion in annual sales. Oracle software revenue and margins improved, while hardware-systems sales continued to weaken, the company said.

This is starting to make its purchase of Sun look very silly as it has been strength in Oracle's traditional software business has led to improved earnings in recent periods, offsetting revenue declines in the company's hardware segment. Oracle is expanding into cloud applications and social media. It combined its Fusion online app with several acquired companies to launch the Oracle Cloud service this summer.

The company added a banking service to the suite earlier this month, and it soon plans to add an infrastructure service as well. The company expects the software-as-a-service, or Saas, business, soon will generate $1 billion in annual sales. Combined sales of software licenses and subscription to its cloud services grew 14% in the Americas.

Chief Executive Larry Ellison told analysts that Oracle delivers more Saas applications than any other cloud-service provider in the world. For the past year the company has focused on "retraining sales people, adding people to focus on these new market opportunities, he said. Mark Hurd, Oracle co-president, reaffirmed that the company still planned on achieving "growth in the fourth quarter in the overall business in hardware."