Ellison Reveals That Sun Is Losing $100M per Month

By Chris Preimesberger  |  Posted 2009-09-22 Print this article Print

For the first time, Oracle CEO Larry Ellison admits his concern about slow-moving proceedings by the European Commission in sanctioning the $7.4 billion acquisition of Sun Microsystems. Ellison also redefines Oracle as a systems company, not just a software producer.

SAN JOSE, Calif.-Oracle CEO and founder Larry Ellison talked about a great many things Sept. 21 in an appearance for the Churchill Club here at the Fairmont, ranging from the 1977 origins of his company, to competing for the 2010 America's Cup, to buying Sun Microsystems, to his current goal-which is to displace IBM to become the biggest, most successful and most important IT systems vendor in the world.

"We've already beaten IBM in software," Ellison said. "Now we want to beat them in systems."

One of the more important revelations was that Oracle's latest announced purchase, Sun Microsystems, is leaking money at a rate of $100 million per month and that the final regulatory blessings of the European Commission on the $7.4 billion Sun acquisition announced April 20 cannot come soon enough.

The EC is expected to make a decision in October on whether a combined Oracle-Sun corporation would present antitrust problems by inhibiting competition in the database and enterprise networking sectors. If the EC does not approve the transaction, it may decide to initiate a full due-diligence probe. Such an investigation could take as long as four months, seriously slowing down the acquisition process.

Oracle, with its acquisitions of PeopleSoft and Siebel, already owns nearly half of the enterprise parallel database market. IBM, with its DB2, comes in at around 22 percent. Microsoft with SQL Server has about 19 percent, and Sybase, Teradata, Ingres and Sun's open-source MySQL take up most of the final 9 percent.

Oracle would control more than half the market following the Sun acquisition. However, analysts contacted by eWEEK generally agreed that the EC will likely sanction the acquisition anyway.

"Right now, Sun is losing $100 million a month; that's a problem," Ellison said. "So timing is important. We'd like to get this thing done. We'd like to end the uncertainty around this thing. If you read the HP [Hewlett-Packard] ads [in recent national publications] that say, 'How much uncertainty can you take?' They're just playing off the uncertainty. The problem we have is, the longer this takes, the more money Sun will lose, and that's not good for anybody."

Ellison spoke for a bit more than an hour onstage with a longtime friend, former Sun and Motorola President Ed Zander, before a near-full house of about 600.

It was the first time that Ellison, who hopes to close the Sun acquisition by October, spoke publicly and in depth about the deal, which was approved by U.S. antitrust regulators on Aug. 20.

"Sun has been a national treasure for the last couple of decades," Ellison said. "Sun has fantastic technology. I think that if you put up IBM, HP and Sun strictly on a [technological] level, I'm not sure you wouldn't pick Sun, if they were all the same price. It has great x86 technology, great networking technology, great processor technology; SPARC is extremely competitive. Solaris is a mature, tested operating system, the best one there is for large systems. Much faster than [IBM's] AIX, any day. Sun also has great open storage systems. It has the best tape archiving systems around. And Java speaks for itself."

Ellison made it clear that Oracle intends to become a full-service IT software, hardware and services supplier to most sectors of the market.

"We have no interest in the hardware business," Ellison said. "We have a deep interest in the systems business. Great systems vendors ship a hardware-software combination that allows them to be instrumental in the acceleration of the Internet.

"We think that by providing our software with hardware ... we can deliver systems that can be the backbone of most enterprises around the world. It's really a combination of the two."

Oracle is very interested in running airline reservation systems, banking systems and telecommunication systems, Ellison said, not in simply selling software, hardware and services that customers would put together and deploy.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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