Ellison grooming possible successors

When asked who the current No. 2 executive is at Oracle, Ellison, 57, named Executive Vice President Safra Catz, who has been at Oracle for two years after a stint as managing director of investment firm Donaldson Lufkin & Jenrette. But in the same breath, Ellison quickly added Chief Financial Officer Jeff Henley.

Oracle has been without an heir apparent since President Ray Lane and Executive Vice President Gary Bloom left the company last year.

"Safra Catz, I suppose, is the No. 2...along with Jeff Henley," Ellison said during an interview with financial firm Salomon Smith Barney that was broadcast over the Web.

But because Henley is the same age as Ellison, the outspoken Oracle founder said he is grooming a handful of younger executives on his team to succeed him. As he stated in the past, Ellison spreads out management duties among a committee of executives. It is a pattern borrowed from Jack Welch's tenure as chief executive of General Electric.

Like Welch, Ellison said he wants to groom multiple potential successors and choose a new CEO among half a dozen people or so on his executive team.

Henley "and I are about the same age, and Jeff is not going anyplace and will be here awhile. But Safra can do the job and any number of people," Ellison said. "I'd love to have six (executives) who are hopeful...and capable of doing the job."

Oracle, the No. 2 software maker behind Microsoft, has been hurt by the same rocky economic climate that has afflicted the rest of the technology industry. Though still profitable, Oracle issued an earnings warning last quarter and toned down revenue projections for the current quarter.

Database software sales are still Oracle's bread and butter, competing against IBM, Microsoft and Sybase. But in recent years, Oracle has faced off against new rivals--such as SAP, PeopleSoft and Siebel Systems--as it moves aggressively into the fast-growing market for software that manages internal company operations, such as sales and marketing.

During the Webcast that focused on Oracle's software competitors, Ellison said Oracle is unfazed by rival IBM's acquisition of database software maker Informix, which has struggled for years because of declining market share. Oracle is the No. 1 database maker, while IBM is ranked No. 2 for the software that stores and collects corporate and Web data.

Oracle will grab more market share from IBM and Microsoft once Oracle's new 9i database is released next month, Ellison said. "We think we'll make huge gains against IBM and Microsoft. They cannot deliver the performance and reliability customers need for applications."

While analysts praised IBM's move, Ellison believes Oracle can convince current Informix database users to switch to Oracle. In fact, the company announced a plan that gives current Informix users a discount on Oracle's technology.

Ellison said the company next month will also release a new version of its application server, software that helps companies run transactions for e-business sites. The new version will compete better against market leaders BEA Systems and IBM, he said.

"Our Java performance has not been good," said Ellison, referring to the popular programming language created by Sun Microsystems. "That has hurt us with BEA. That's fixed in the new release."

Ellison on Tuesday reiterated that customers are still cautious about spending money on new technology during the downturn in the economy. But as reported earlier, the company is trying to spur sales of its business software by announcing a new software and service package called "Customer Relationship Management (CRM) in 90 days."

Ellison said Oracle hopes the fast installation will foster more sales of its CRM software, one of the fastest-growing product lines in the company. The software automates a company's sales, customer service and marketing activities. It's part of Oracle's 11i e-business suite, a package of software that manages a company's financials, human resources, manufacturing and sales operations.