Ellison said in a written statement that he is not engaged in discussions with Apple or any of its shareholders concerning a possible acquisition of the computer manufacturer, an idea he has been floating for a month.
According to the statement, however, he'll be keeping his eye on Apple and "may well purchase stock for investment purposes or otherwise, or revisit in the future [the] decision regarding an acquisition or control of that firm."
A spokesman for Ellison said the CEO declined to elaborate on his reasons for dropping the takeover aspirations.
The company, which posted a net loss over $700 million in its second quarter, has seen its losses widen over the last two consecutive quarters amid a falling stock price that recently hit a ten-year low.
Apple issued a press release, which said it had no specific comment related to Ellison's withdrawal from his takeover plans.
"Apple has a clearly articulated strategy and a detailed plan to return the company to profitability. We have a seasoned management team and have undertaken a series of initiatives over the last year to streamline the business, improve quality, and sharply focus on our core markets," Apple said in its statement.
Ellison created an industrywide stir when he floated a trial balloon in the San Jose Mercury News late last month. The paper reported that the Oracle chief executive was considering a bid to buy Apple to turn around its performance and boot out the current chief executive and board members--an idea he has contemplated publicly at least twice before. He originally wanted his friend and Apple cofounder Steve Jobs to join him in the takeover, but Jobs had characterized the latest suggestion as "bizarre."
This latest proposal included more details but was still far from a full-fledged bid for the company.
Ellison would have made his play for a majority stake in the computer maker by forming an independent investor group. The group would have paid Apple shareholders roughly $1.25 billion in cash on top of 40 percent in equity in the company, boosting the value of the deal to roughly $2.1 billion.
Many analysts, and apparently Apple CEO Gil Amelio, didn't take Ellison's suggestion too seriously, but the notion took hold because of persistent rumors that Apple was up for sale. Many users were also enthusiastic about the idea: In a recent NEWS.COM Poll, 56 percent of readers thought Ellison should have pursued his plan.
But not all Apple watchers will miss Ellison. "It's a great day for Apple Computer because Larry Ellison no longer has Apple swinging in the breeze," industry commentator David Coursey said. "Mr. Ellison has done tremendous damage to Apple. Like a cat playing with a mouse, the cat has lost interest and walked away before he killed the mouse."
Observers point out that Ellison's change of heart doesn't mean that Apple won't end up in merger talks with somebody else. Amy Wohl, a long-time industry consultant who consulted on the launch of the Macintosh in the early 1980s, said, "I suspect Apple will still need to have a relationship with someone to be a partner or ally, some long-term and intense relationship, although not necessarily [someone interested] in buying Apple."
"It should be someone who understands the PC industry and has a long-term view and strategy. That might not be easy to put together, given Apple's unrealistic view of its worth," Wohl added.
Jeff Pelline contributed to this report.