At any time, Larry Ellison can erupt with a litany of seeming delusions on technology (network computers), politics (Ellison as Governor), or culture (Ellison as Daimyo?).
But sometimes, the eccentric CEO of Oracle (www.oracle.com) actually lowers himself into the world inhabited by most executives. That is, a world involving business operations, finance and company strategy. Unfortunately, the pronouncements can be just as bizarre.
Ellison recently predicted his organization would use Internet applications to become the "hottest company in town". Oracle will use the Internet to cut $1 billion of its own costs over the next 18 months. Or so goes the latest Ellison pronouncement.
Ellison is likely to make a few more pronouncements when Oracle reports its fourth quarter earnings June 15. Ellison's goal is clear: Keep Wall Street happy and show a pop in sales of those same Internet applications the company is hoping to cut costs with.
In the near term, no one except for maybe Ellison himself actually expects much from Oracle's financials. Last month, following the company's annual analyst meeting, several brokerages lowered their earnings estimates for the quarter just ended.
"Oracle's not going to blow out the numbers," said Marshall Leisten, vice-president with Dain Rauscher Wessels and a former employee in Oracle's sales operation.
First Call's survey of 30 analysts predicts fiscal fourth quarter earnings of 32 cents a share. Oracle earned 27 cents a share in comparable period a year earlier.
Wall Street has every reason to be skeptical. In the third quarter, Oracle's earnings were in line with estimates, but revenue fell well short of projections. Oracle reported third quarter sales of $2.08 billion, but Wall Street was expecting $2.2 billion.
Ellison spun himself silly talking about how Oracle would crush the competition, but couldn't hide applications license sales growth of 5 percent in the third quarter. Ellison played down Y2K concerns, but the financials showed something different.
Although its traditional business of corporate databases remains solid, the back office software applications are viewed the growth engine for the company, said analysts. But Oracle's focus on applications also means it has to contend with longer sales cycles in the corporate world and a Y2K spending slowdown. Oracle's applications competitors such as SAP and PeopleSoft have struggled.
Is Ellison's round-house swing at the Net a way to hide weak applications revenue growth?
Could be. Even analysts that cut Oracle some slack like William Epifanio, an analyst with J.P. Morgan Securities, don't expect much from Oracle's next two quarterly reports.
"Given that Oracle is more of a 'Show Me' stock than they'd like to be, we can't expect a strong fourth quarter or first quarter from them," Epifanio said. "They're going through a weak spot in a market where, because of Y2K concerns, spending has slowed. . It could be ugly."
Wall Street wants to see rejuvenation on the revenue line. If Oracle delivers solid revenue growth in the fourth quarter despite Y2K fears , Oracle might actually get hot.
The question is how long would Oracle stay hot before fumbling again.
You have to wonder why Ellison tells investors to expect a successful moonshot when recent results have been more along the lines of Apollo 13. The market rewards consistent, reliable performers -- the ones who know how to temper expectations.>