Oracle Leader Ellison Is Not 'Stepping Down' - InformationWeek

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9/19/2014
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Oracle Leader Ellison Is Not 'Stepping Down'

Oracle announces new titles, but Larry Ellison, Safra Catz, and Mark Hurd say roles won't change. Buried news: Oracle misses earnings.

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Oracle on Thursday announced that company co-founder Larry Ellison is giving up the CEO title and has been named executive chairman and chief technology officer (CTO) while Safra Catz and Mark Hurd have been promoted from co-presidents to co-CEOs.

Early accounts hailed the news as "the end of an era," but all three executives quickly clarified, during an earnings conference call after Thursday's stock market close, that their roles and responsibilities will remain the same.

"I want to make sure we are very clear," said co-CEO Safra Catz, when asked how the title changes might cascade down through the ranks. "There will actually be no changes whatsoever."

Catz will stop using the CFO title, she said, but no new CFO will be hired, and she will remain the principal financial officer overseeing manufacturing, finance, and legal functions. And Mark Hurd, who said he won't be appointing or promoting any new executives beneath him, will continue overseeing all sales, service, and vertical industry global business units.

[Want more on Ellison's recent birthday landmark? Read 7 Gift Ideas For Larry Ellison's 70th Birthday.]

"We're pretty flat in terms of the way we run this place, and we want to keep it that way," Hurd said. "I want to stay closer to the action, not get farther away."

The only reporting change will be that Catz and Hurd will now report to the board -- of which Ellison is now the executive chairman -- rather than reporting directly to Ellison. Jeff Henley, who has served as Oracle's chairman for the last 10 years, was named Oracle's vice chairman.

Oracle executive chairman and CTO Larry Ellison
Oracle executive chairman and CTO Larry Ellison

Ellison even insisted at one point that he will continue to participate in earnings calls with financial analysts, a task usually handled by CEOs or CFOs. But then, Ellison is not "chairman," he's "executive chairman," a slightly different title that suggests a more active, hands-on role.

If leadership isn't changing, why change titles?

"Mark and Safra have done a spectacular job, and I think they deserve the recognition of their new title," said Ellison, who turned 70 last month. "I'm going to continue to work with Thomas Kurian in software engineering, John Fowler in hardware engineering, and Ed Screven and Mark and Safra exactly as I have in the past."

The executives essentially confirmed an assessment that quickly emerged among knowledgeable pundits in the Twittersphere, who heavily retweeted the comment, "Larry Ellison stepping down to become CTO of Oracle is like Vladimir Putin stepping down to become Prime Minister of Russia." Even when Dmitry Medvedev was President of Russia from 2008 to 2012, the world knew that Prime Minister Putin was still in charge.

As for that CTO role, Oracle didn't have that position before Ellison was named to the post, and the tech-savvy co-founder has always been deeply involved in engineering and product development -- particularly where Oracle database and engineered systems are concerned.

One industry insider suggested Thursday's non-announcement might have served the purpose of distracting investors. "If I were a cynic, I’d say that the timing of this announcement has a lot to do with the fact that Oracle missed its quarterly numbers," said Frank Scavo, president of Computer Economics, an IT research firm based in Irvine, Calif. "That, to me, is a much bigger story than Larry's non-exit, but it seems to have been pushed to the bottom paragraph in most early news accounts."

Indeed, Oracle missed first-quarter market expectations by $200 million, reporting revenue of $8.6 billion versus expectations of $8.8 billion. Earnings were 62 cents per share while the market was expecting 64 cents. Most of the shortfall was attributable to an 8% decline in hardware systems revenues. Ellison, Catz, and Hurd put the best face on the financials, focusing on record cash flow of $6.7 billion and a 30% increase in cloud services revenue to $475 million for the quarter.

Ellison and Catz said Oracle's goal is to surpass cloud apps leader Salesforce.com in cloud revenue while growing faster than Workday. With Oracle's cloud run rate at $2 billion and Salesforce.com's surpassing $4 billion, that might just be a long-term goal.

Given SAP's $8.3 billion mega-acquisition of Concur announced on Thursday, expect Oracle to drop to third place in the cloud apps market (IBM is in the $4 billion range in cloud revenue but competes more directly with Amazon Web Services). SAP was on a $1.6 billion cloud run rate previously, but adding Concur -- assuming that deal is approved -- will add an estimated $700 million to that figure.

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Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio

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moarsauce123
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moarsauce123,
User Rank: Ninja
9/20/2014 | 7:40:31 AM
Re: If the roles aren't changing...
When you look at the small print in the releases you will see that earnings are down. The title shuffle is an appeasement to gullible shareholders.
moarsauce123
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moarsauce123,
User Rank: Ninja
9/20/2014 | 7:38:44 AM
Re: Retreat without defeat
In comparison to line of business workers the C-level salaries didn't drop enough. Nobody at any company is worth that thesefolks are getting. Cut the position and the person and business will go on as it did before and maybe even do better. Hire a greeting uncle from the local Wal-Mart to act as spokesperson for shows and other functions.
D. Henschen
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D. Henschen,
User Rank: Author
9/19/2014 | 12:41:08 PM
Re: Retreat without defeat
Top-executive salaries already took a big hit, but the real pay windfall is in stock options. We'll see how that plays out. I'm not sure whether CEOs necessarily trump all others when it comes to stock option grants.
Charlie Babcock
IW Pick
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Charlie Babcock,
User Rank: Author
9/19/2014 | 12:25:33 PM
Retreat without defeat
If you're board chairman and CEO, you can't demand the pay that the person directly responsible for the company's performance can. Why would Larry agree to such a post with reduced prospects? Because he's astute enough to see that Oracle's salad days are over and there may be a long, slow decline coming, one for which he wouild be held responsible. Large investor groups were restive on the pay vs. performance issue. This is a retreat without defeat strategy.
D. Henschen
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D. Henschen,
User Rank: Author
9/19/2014 | 11:01:22 AM
Re: If the roles aren't changing...
Nowhere in Oracle's press release did it say "retirement," and none of the top-three execs used that word, either. Ellison has long left the corporate BS and operational day-to-day to Cats and Hurd. He's about big-picture strategy and the technology.

So there is no real change, but the mainstream press has fallen in love with this inaccurate "retirement" story and they're milking it for all it's worth. The pursuit of page views over any interest in reporting accuracy.
jries921
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jries921,
User Rank: Ninja
9/19/2014 | 10:36:22 AM
If the roles aren't changing...
...then why should the titles?  I suspect there is more going on here than is being announced.  In  any case, Larry Ellison is still king; Safra Catz and Mark Hurd are merely senior ministers who could be dismissed at any time.

 
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