Posted on: Thursday, June 14, 2001
Oracle seeks to retain database leadership
Associated Press
SAN FRANCISCO — When he introduces a new version of database software today, Oracle Corp. chief executive Larry Ellison will try to recapture the swagger that made his company a technology juggernaut.
In the past year, Oracle has stumbled, hit with slowing growth and increasing pressure to slash prices. Investors have become disillusioned as the share price, which hit $46.47 in the past year, has fallen.
"Not so long ago, you were considered a moron if you were trying to build a business on the Internet and didn't buy Oracle software. That's not the case anymore, and Oracle's competitors are becoming much more aggressive," said industry analyst Andrew Roskill of UBS Warburg.
Oracle's perceived vulnerability intensifies the pressure on the mercurial Ellison, whose personal fortune has plunged by $33 billion with the 60 percent decline in his company's market value from June 2000.
Ellison, 57, is trying to reinvigorate Oracle without two of the top executives, Ray Lane and Gary Bloom, who helped the company more than double its operating profit from $1.2 billion in its fiscal year ending in May 1998 to $3.1 billion in the year ending in May 2000.
Lane left as Oracle's chief operating officer at the end of June 2000 after clashing with Ellison. Bloom, who oversaw Oracle's push to sell more software that automates businesses, left in December 2000 to run his own company, Veritas Software Corp. Ellison hasn't filled the vacancies, choosing instead to spread the duties among a management team he calls one of the most talented in the industry.
The concerns about Oracle's management team have been heightened by recurring rumors that the company's chief financial officer, Jeffrey Henley, is mulling retirement after 10 years on the job.
Henley, 56, added grist to the mill last month by selling his Atherton home near Oracle's Redwood Shores headquarters. But a spokeswoman said Henley isn't leaving Oracle anytime soon.
Ellison will get a chance to create a positive buzz about Oracle today when he formally unveils the company's latest version of database software.
The software, called 9i, will extend its technological lead in databases, which businesses use to organize information that is becoming increasingly important with the Internet's rise.
Oracle's technological advantage, though, is being overshadowed by the company's software prices.
As it stands now, IBM is marketing its database product as an alternative three to five times less expensive than Oracle's. Microsoft said its database is as much as 10 times cheaper.
"If they do something about their pricing, it will at least show that they are listening to their customers and responding to their concerns," said Betsy Burton, a database industry analyst with the Gartner Group.
Oracle representatives declined to discuss Ellison's agenda for today, but said he will likely address many of the issues dogging the company. Despite its recent difficulties, Oracle remains the clear leader in database sales with a 33.8 percent market share at the end of last year versus 30.1 percent for IBM and 14.9 percent for Microsoft, according to Gartner.
But analysts say IBM is becoming an increasingly dangerous threat, particularly after its recent purchase of Informix's database business for $1 billion.
"Our message is starting to hit people right between the eyes," said Jeff Jones, director of marketing for IBM's database division.
Reducing prices on its database could represent a mixed blessing for Oracle. While it would please customers, the action could deliver another blow to Oracle's already weakening financial results.
Like many other tech bellwethers, Oracle delivered disappointing profits to start the year. In its latest quarterly results next Monday, the company is expected to earn 14 cents per share, down from an earlier 17 cent estimate based on the consensus of analysts polled by Thomson Financial/First Call.
