Ellison optimistic about Oracle's future

"Our business has at least stabilized. It's not getting worse. It's getting a little better," Ellison told reporters Tuesday at his company's Oracle OpenWorld customer conference here. "Business is not spectacular, but it's stable. I personally believe we will start seeing growth next calendar year. It could be very soon. It could be six months."

Oracle recently warned that it would miss Wall Street analyst estimates for a fiscal second-quarter profit of 11 cents per share. Oracle now expects profits of 9 cents to 10 cents per share when it reports second-quarter earnings Dec. 13.

In an interview last week with CNET News.com, Ellison predicted the company would return to record profits and start showing revenue growth as early as the fiscal third or fourth quarter.

Ellison gave an optimistic view of his company's future, from finances to its competition against software rivals IBM, Microsoft and BEA Systems.

"We will do well in gaining share. We are in the best competitive position we have ever been with products," he said.

Ellison sees strong revenue growth in two areas: its Oracle.com application service provider (ASP) business that allows companies to rent Oracle's e-business software over the Web, and its application-server software business--technology that runs e-business and Web site transactions.

Oracle has tried renting its software over the Web to small and midsized businesses, but lately, the company has received strong interest from large companies, he said. "Everyone feels ASPs are dead. Not us," he said.

Earlier in the day, the company unveiled a new version of its application-server software. BEA and IBM are the current leaders in the lucrative market that is expected to reach $2.25 billion in sales by year's end.

Ellison said he expects to lure away some BEA customers because many of BEA's application server customers use Oracle's database.

"BEA is living on Oracle's installed base. BEA is living on borrowed time," he said. "They have been making money (by) pitching a tent in our back yard."

Ellison also predicted that the company would reach 50 percent margins once the economy recovers. Margins are the difference between a company's revenue and its costs.

"I predicted awhile ago we'd hit 40 percent margins. I will revise that as soon as the economy turns. We (will reach) 50 percent margins. There's no question we can do that," he said.

Ellison dismissed the suggestion that recent personnel departures would adversely affect the company. Oracle Executive Vice President Jay Nussbaum resigned Friday to join KPMG Consulting as an executive vice president, the third high-level executive departure for Oracle in the past 18 months. But Ellison said the company will survive because of Oracle's deep bench of talented executives.

"People keep pointing to us (and saying that) we keep losing people. We have a deep management team," he said. "We're like the Navy. We have a lot more captains than we have ships."

Ellison also called Web services the latest over-hyped fashion in the computer industry, comparing it to business-to-business and business-to-consumer e-commerce. But he said it was still a good technology and pointed out that Web services technology runs throughout the company's family of products.

Web services link servers over the Internet to exchange data and combine information in new ways. These services run on Web-based servers instead of individual PCs, allowing people to use them through any device that has Internet access, including cellular phones and handheld computing gadgets, as well as desktop and notebook computers.

Ellison held a second news conference Tuesday afternoon to discuss his plans to win the America's Cup yacht race. Ellison has bankrolled a racing team and built a computerized sailboat with Oracle database technology installed inside it. Ellison will be part of the crew next October when it competes against teams in the United States and in Europe. The winner will battle New Zealand for the America's Cup in early 2003.