Internet

Oracle sees 25% database growth

Chairman Larry Ellison says his company's U.S. database business is expected to grow 25 percent during the current quarter.

SAN FRANCISCO--Oracle (ORCL) chairman and chief executive Larry Ellison said the company's U.S. database business is expected to grow 25 percent during the current quarter, while its application business is expected to grow by 50 percent.

In his first appearance at an investment conference in seven years, Ellison predicted strong growth for Oracle's third fiscal quarter and sang the praises of network computing.

The company's expected growth in the United States tends to be a leading indicator for Oracle, he said in a speech to the 15th annual Technology Week conference held by NationsBanc Montgomery Securities, noting that the U.S. market is "by far" Oracle's strongest.

Oracle had come upon rough times last quarter as the networking industry started to slow down from the growth levels it experienced during previous years. A year ago, Oracle's database revenues grew 71 percent, but in the most recent quarter those same revenues grew only 4 percent.

During the second quarter, Oracle fell far short of Wall Street's expectations and watched its stock price enter a free fall, dropping 29 percent and setting a new Nasdaq record for the most actively traded stock.

Ellison explained away the lackluster second-quarter results by blaming a combination of factors--a delay in getting products out the door and the continuing currency crisis in Asia. He said, however, that the company's production problems are behind it and will not be a problem going forward now that its products are shipping.

As for the performance of Oracle's core business in the current quarter, Ellison said the database business is alive and well. "If [25 percent growth] means death, I'm confused," Ellison said, referring to analysts' downgrades, and to the financial community's general nay-saying about the future growth of the networking industry after the company missed expectations last December.

"The idea that the industry is saturated is a very bizarre notion," said Ellison. "Oracle comes in with a bad quarter, and you'll hear lots of reasons why, but it had less to do with demand size, and more to do with our execution."

He acknowledged that Oracle was a bit ahead of itself in promoting its network computing products, and said that the company's aggressive planning, and its inability to follow through on plans, contributed to problems in the core database business. "It is a considerable part of the problem that we faced," he said.

Ellison said Oracle had a very hard time delivering its products as promised. "We started selling something that we didn't have," he said. "It took a lot longer than we thought...it was a self-inflicted wound."

Now that his company's network computing applications finally have hit the market, Ellison used today's keynote as an opportunity to tout the benefits of network computing. He said giving businesses alternatives aimed at making their computer networks simpler would go a long way toward alleviating the huge labor shortage the technology industry currently is facing. One such alternative, he said, is putting a simple, low-cost appliance into the hands of the user.

"If your telephone breaks, you buy a new one. If your television breaks, you buy a new one," Ellison said. "If your PC breaks, you lose your data."

He explained that network computing is designed to take the uniqueness of the desktop and put it into the hands of professionals. "We can't risk having our data existing on desktop PCs, where it can be lost," he said. "We take it and put it on servers."

"The only application users need is a browser, and you'll never need to upgrade that software," Ellison continued. "A user will have access to all of the latest applications by way of a server. The server will be maintained by professionals."

In addition to the company's network-enabled applications, Ellison also sees his company benefiting from a partnership with Intel (INTC) in which the two companies would work together to build a machine that Ellison described as "pure Oracle."