The Oracle CEO, who owns 60 percent of NetSuite, is setting 32 million shares aside, NetSuite said in its prospectus.
Larry Ellison has a giving heart this holiday season. In the Dec. 10 commencement of its online IPO auction, NetSuite, in which the Oracle CEO has a 60 percent ownership, revealed that Ellison will donate some of the proceeds from NetSuite's stock sales to charities.
NetSuite filed for an IPO in June and on Dec. 10 kicked off its online shares auction-a format designated to allow both institutional and individual investors to secure IPO shares, according to a statement released by the company.
NetSuite filed a statement with the Securities and Exchange Commission in October that said Ellison would set aside the voting power of 639.3 million NetSuite shares in a "lockbox"-disabling his direct voting influence on the company. With his shares effectively locked away, Ellison will not have the right to vote for NetSuite board directors as long as he remains director of Oracle. However, Ellison retains the right to vote on changes in NetSuite's ownership.
In NetSuite's prospectus, posted on the company's IPO auction Web site, NetSuite officials said Ellison will transfer into another lockbox almost 32 million shares that will be used for charitable purposes upon Ellison's direction.
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While it's unclear if Ellison will donate charitable gifts to outside organizations or to his own Ellison Medical Foundation, which supports biological research in understanding the aging process and age-related diseases, the charitable designation for NetSuite's shares seems a good first step in rebuilding Ellison's shaky reputation in the world of billion-dollar givers. The highlights of his charitable donations include one instance where a California judge allowed Ellison to donate $100 million to his own charitable foundation to settle an insider trader lawsuit.
In another instance-a response to the Sept. 11 terrorist attacks-Ellison offered to donate software to the federal government that would enable it to build a national identification database and issue national ID cards, an offer that fell under fierce speculation and debate. In June 2006, Ellison withdrew a $115 million pledge to Harvard University.
On the other hand, NetSuite's IPO and subsequent trading success could determine how much Ellison chooses to distribute from the NetSuite lockbox.
NetSuite sells on-demand ERP (enterprise resource planning) software to the small and mid-sized market. While it's credited as the first company to develop an integrated suite of back-office applications that help businesses run-from financials to e-commerce automation-the company is facing stiff competition, including Oracle, which has its own on-demand capabilities. At the same time, SAP has an on-demand suite geared toward the mid-market, and Microsoft will utilize its CRM (customer relationship management) on-demand software, expected this month, as a development platform that some analysts say will be the model for on-demand ERP.
In fiscal year 2006, NetSuite saw a net loss of $35.7 million, and $20.6 million for the first nine months in 2007. In all, the company has accumulated a deficit of $241.6 million.
NetSuite is expected to begin trading on the New York Stock Exchange Dec. 19 under the "N" symbol.
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