Posted by: Ed Scannell
European Commission, Exadata Database Machine, Hewlett-Packard Co., IBM, Oracle-Sun deal, The America's Cup
Speaking at an event over the weekend celebrating his triumphant return with The America’s Cup in hand, Oracle chairman Larry Ellison said he expects his other prize – Sun Microsystems – to be profitable “right away”.
This is not exactly breaking news. Just last month at the combined company’s debut, Chairman Larry said he expected to revive Sun’s sagging fortunes, pulling the company back into the black even by the end of this month. At that event he said he expected to make about $1.5 billion in operating profit from Sun’s portfolio after owning the company for a full year and that he expected to take that number much higher over the next few years.
This sort of unbridled optimism gives one pause however. From early September, when the European Commission (EC) began its investigation of Oracle’s acquisition of Sun, until late December we heard a steady rant from Mr. Ellison about how that investigation was slowly strangling Sun’s chances for survival.
For instance, in late September speaking at a dinner sponsored by The Churchill Club, the chairman said the investigation was significantly contributing to Sun losing some $100 million a month. This statement came in the heels of Sun having reported a quarterly loss of $147 million.
In that talk the good chairman said the longer the EC’s approval process takes “the more money Sun is going to lose, and that’s not good for anybody. We want to get this (acquisition) done to save as many jobs as we can.”
Also contributing to Sun’s cloudy outlook around that time were multiple analyst reports surfacing indicating Sun was losing huge chunks of market share to archrivals IBM and HP in server hardware. A major contributor, of course, was the lingering uncertainty of Sun’s fate thanks to the EC’s investigation, which prompted Sun users to halt purchasing decisions or jump ship.
But with yesterday’s comments, all the angst Larry had over the EC’s four-month long investigation sun setting Sun’s future seems to have dissipated rather quickly. Now he is talking boldly about hiring a couple of thousand new employees to bolster Sun’s products instead of laying them off (although he did indicate there could be up to 1,000 employees let go), and exhibiting confidence about how the Oracle-Sun developed Exadata 2 super server, and the various stack computing strategies built around it, will soon outgun any offerings from IBM and HP.
So was Larry crying wolf to the EC about its investigation crippling Sun, or is his bold optimism about Sun’s chance simply masking the tough task he has ahead of him to make this deal succeed over the short term? It is hard to say, it may be a little of both. But given his claim he will make Sun profitable by the end of the month, it won’t take long to find out.
If you are concerned about Larry giving up his day job to spend more time plotting his defense of The America’s Cup, don’t be. The 65-year-old chairman says is not ready for retirement indicating he will continue to pursue software and sailing with an equal amount of vigor.
“I love Oracle and I love sailing, and I think I can do both,” he said.