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THE DAY AHEAD: Wall Street frets as Oracle becomes Ellison Inc.

COMMENTARY -- A lot of Oracle (Nasdaq: ORCL) analysts sounded like amateur psychiatrists after the company lost Executive Vice President Gary Bloom. Bloom, who left Oracle to become CEO of Veritas Software (Nasdaq: VRTS), was highly respected, but his departure is hardly the only reason Oracle shares tanked Monday.

It takes a village to keep Oracle CEO Larry Ellison in line. And the village is evacuating.

Wall Street's worst nightmare is Ellison running Oracle all by himself. Ellison, who is known to be a bit too enthusiastic at times and sometimes simply delusional, needs his keepers. Bloom was part of the damage control team.

Here's how Oracle's spiel works on Wall Street. Ellison makes some grandiose promise and runs amok with the vision thing. Then the other execs tell analysts, "Here's what Larry really meant." The formula has worked so far, but it won't work if Oracle becomes Ellison Inc.

And Oracle is looking a lot more like Ellison Inc. these days. Ellison has assumed more day-to-day executive responsibilities within the past year, and the departure of Bloom and Chief Operating Officer Ray Lane have put analysts on alert. Bloom's duties -- corporate development, Oracle's venture fund and the internal adoption of Oracle's e-business suite -- will be divided among the company's vice presidents, analysts said. When Lane left earlier this year, Oracle said the same thing. Two top managers leave and Oracle isn't filling their positions.

You see where this management revolving door could be headed -- there won't be any adults left.

"Bloom's departure renews concerns about the depth and makeup of Oracle's management ranks and the role of Ellison," said Chase H&Q analyst James Pickrel, in a research note. "Ellison now has direct senior responsibility for both worldwide sales and all of product development."

Richard Davis, an analyst at Needham & Co., downgraded Oracle to a "buy" from "strong buy" because Bloom left.

"Oracle undoubtedly has thousands of highly talented employees. Nonetheless, departures of two managers, both of whom were highly regarded within the organization by their colleagues, can only encourage some individuals that may have considered leaving the firm, to do so," wrote Davis. "This is human nature and no amount of arguments to the contrary can change this reality."

The catch here is there's no evidence Oracle is hurting. Oracle's business is fine and the quarter is on track, analysts said. Pickrel said his checks indicate that Oracle's core business remains strong.

Bloom wanted to become a CEO and Ellison isn't going anywhere. Oracle could have made Bloom an operating chief or president, but Ellison prefers to have several equally ranked senior vice presidents who can be kept on a short leash.

The name game

OpenWave (Nasdaq: OPWV), which was created from the Phone.com and Software.com merger, couldn't wait to dump its dot-com heritage.

You can't blame OpenWave for dumping the dot-com. There's a major stigma associated with the dot-com suffix, and both Phone.com and Software.com were well below 52-week highs. Last year, many companies used the dot-com suffix to get a Wall Street boost, but never thought about what would happen when the tide turned.

Phone.com and Software.com were prime examples. The companies provided wireless Internet applications and messaging software and could have gotten by without the dot-com tacked on to their monikers. But it was the hip thing to do.

Now OpenWave is going to blitz you with ads about its new name as if to say "we aren't a dot-com." On an analyst conference call, OpenWave sounded a lot like a grown-up Internet infrastructure software company.

OpenWave CFO Alan Black said the company sees 20 percent to 25 percent sequential revenue growth from the $80.8 million in combined revenue for the September quarter. For 2001, Black said the company is on track for operating profits by the March 2001 target. Revenue for calendar 2001 is expected to be $580 million.TDAIN


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