Oracle's Ellison Reaffirms Rapid Profitability For Sun - InformationWeek

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2/21/2010
08:51 AM
Bob Evans
Bob Evans
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Oracle's Ellison Reaffirms Rapid Profitability For Sun

Oracle CEO Larry Ellison reaffirmed Saturday that Sun's formerly unprofitable operations will become profitable "right away" as part of Oracle. That follows his promises late last month that Sun will be hiring more people than it lets go, and that Oracle's prize acquisition will turn a profit this month (February).

Oracle CEO Larry Ellison reaffirmed Saturday that Sun's formerly unprofitable operations will become profitable "right away" as part of Oracle. That follows his promises late last month that Sun will be hiring more people than it lets go, and that Oracle's prize acquisition will turn a profit this month (February).Ellison's reaffirming comments came Saturday at a celebration in his honor in San Francisco (he got the keys to the city) for winning the America's Cup, and were cited in a Reuters news story. But that news story is also flat-out wrong in its contention that "Oracle executives have previously declined to say how long it would take for Sun to start turning a profit" because at the big Oracle-Sun coming-out party late last month, Ellison laid out a very precise timetable for Sun's profitability as noted in our blog post, Oracle CEO Ellison: Sun Will Be Profitable In February:

Here are Ellison's exact words about Sun's financial health and prospects via my transcription from the Oracle webcast:

"And how soon will that [profitability] occur? How long do investors have to wait? Not at all; not at all. We'll be profitable this-in February. We'll be profitable in March. We'll be profitable in April-and when I say 'we': the Sun business. We'll be profitable in May.

"Sun will be contributing to Oracle's profits from the first month we own the company. And for the first full year we own the company starting in June, we will make at least a billion and a half dollars in operating profit [from Sun], as we promised, because the Sun business is gonna grow.

"Sun has a fabulous installed base, a fabulous group of customers, a wonderful pipeline of technology-and we just have to do a better job of taking this wonderful engineering output and delivering it to customers."

At that same event, Ellison also promised that Sun's profits will come through investment and growth rather than by slashing costs:

Making a huge commitment to Sun's viability and value, Oracle CEO Larry Ellison said Sun will become profitable next month and will remain in the black thereafter. Setting up that unexpected promise, Ellison said, "So we're hiring, not firing. We're not cutting Sun to profitability, we're growing Sun to profitability."

And from there, Ellison was on a roll, looking to squash any doubts anyone might have about Sun's short-term as well as long-term financial viability, going so far as to employ the inclusive pronoun "we" to refer specifically to Sun's business. Combined with his earlier comments about his plans to hire twice as many people (2,000) as it intends to lay off, the profit assurances from Ellison were designed to accomplish at least three vital objectives:

1) Reassure current Sun customers that their investments will be not only protected but enhanced.

2) Reassure Sun employees that they are a strategically essential element of Oracle's present and future.

3) Reassure Sun and Oracle investors that the acquisition will enrich Oracle not only technologically but also financially.

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