• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Oracle Corp. Focuses on Database, Application Products

Posted on: Sunday, 7 September 2003, 06:00 CDT

Sep. 8--As 20,000 Oracle software users gather this week at the annual OracleWorld conference in San Francisco, the Redwood Shores software giant is trying to refocus the technology world's attention on its core database and application products.

It won't be easy. The company's hostile $7.5 billion bid for rival PeopleSoft this summer and executives' blunt talk about the need for industry consolidation has made it a more controversial and divisive presence in the technology sector than ever.

"Successful companies that are bold and assertive kind of polarize opinion," said Executive Vice President Chuck Phillips in a recent interview. "You do have to be aggressive to win. There are a lot of companies that may be perceived as nicer than us. But that's why they're also smaller."

But with the PeopleSoft takeover attempt currently on hold pending a federal antitrust review, Oracle is hoping to showcase what some analysts say are improving prospects for its own business: database software and related applications for such business areas as customer service and accounting.

And the company is hoping that Phillips, who joined Oracle in mid-May after years as a leading Wall Street analyst, will play a key role in repairing its tattered reputation with its customers.

For months before Phillips was hired, Oracle Chairman and Chief Executive Larry Ellison had been discussing the need for the industry to consolidate. There were too many companies and too few customers, he said. Ellison predicted a wave of consolidation that would lead to dozens of companies either failing or merging.

It was a grim message that grated on the perpetually optimistic ears of Silicon Valley executives. But Oracle seemed to be backing up its words on June 6, when it made an unsolicited takeover offer for Pleasanton-based PeopleSoft, a rarity in the high-tech world.

Ellison's blunt statements about dumping PeopleSoft's products and employees and his initial low bid led some observers to question whether he was serious or just trying to disrupt PeopleSoft's business.

As PeopleSoft painted Oracle as the villain, Phillips was thrust out front to sell the deal to large institutional investors, nervous PeopleSoft customers and the public.

On July 17, Phillips found himself sitting in front of an auditorium full of Oracle co-workers to explain the company's bid. An employee rose to ask why there seemed to be so much hostility directed at Oracle.

Phillips said part of his duty was to help to change some negative perceptions about the company. At part of its effort to reach out to customers, Phillips told the gathering he was creating an Operation Bear Hug that would include new outreach programs and executive relations programs to keep in constant contact with customers.

"I think that one of the biggest things that we can do to drive growth is basically make sure that our customers know that we really care about them," Phillips said. "And I think we do. We perform that every day."

OracleWorld will provide Phillips his best chance yet to wrap his arms around Oracle's customers and developer community. The roster of keynotes this week features a virtual who's who of Silicon Valley, including Intel CEO Craig Barrett, Hewlett-Packard Chairman and CEO Carly Fiorina, Sun Microsystems Chairman and CEO Scott McNealy, and of course, Ellison.

Much of the attention this week will be centered around a concept called "grid computing." It's a series of products and systems that Oracle says will help customers automate the management of their current networks of computers and servers so they're used more efficiently.

For instance, if 20 percent of one server is being used and 100 percent of another server is being used, grid products will help locate that extra capacity and shift some functions to that underused server. That could save a company from needing to go out and buy another server.

"It optimizes that entire set of resources," Phillips said. "And that's saving money."

Other major technology companies, including IBM, Sun and HP, are peddling similar visions of computing under different names.

Nelson Mattos, director of IBM Data Management, said he will be watching for details of Oracle's announcements this week to see if the company is rolling out new technology or just repackaging old products under a cloud of marketing hype.

"I'm waiting to see what Oracle will be delivering," Mattos said. "Right now, I think their definition of grid computing is much more restrictive than IBM."

On Friday, Oracle will also be announcing its first-quarter earnings, amid a wave of optimism about its prospects. Since June, 10 analysts have upgraded their rating on Oracle's stock to the equivalent of "buy." Only one has downgraded the stock.

Many feel that Oracle's size and its leadership in the database market make it a tough competitor, especially as there are signs that tech spending is improving. Several analysts also noted improvement in Oracle's application business since it reorganized the sales force last year.

But there's also plenty of uncertainty. Kash Rangan, a senior analyst at Wachovia Securities, wrote in a note to clients that he still wants to see a better road map about how Oracle plans to boost revenues.

"The company needs to identify and execute a 'growth' plan," he wrote. "So it does not become just a 'cash cow' possibly yielding dividends in the future."

And amid all the smiles and hype this week, don't expect Oracle to reduce its intensity. It has openly stated that it plans to acquire more companies in the coming months and years as part of its consolidation strategy. And that includes PeopleSoft.

"We're just like the Oakland Raiders of software," Phillips said, referring to the football team's tough reputation. "But the Raiders fans love them."

-----

To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.mercurynews.com.

(c) 2003, San Jose Mercury News, Calif. Distributed by Knight Ridder/Tribune Business News.

ORCL, PSFT, HPQ, INTC, SUNW, IBM, 6680,

More News in this Category