interview w. oracle Chief Financial Officer Jeffrey Henley
oracle Relieved As Sales Climb In The Americas
Date: 4/9/98
Author: Michele Hostetler
While Asia continues to be a drag on database sales, the Americas have given the industry a boost.
The leading seller of database software, Oracle Corp., rebounded in its fiscal third quarter ended Feb.
28, after a lackluster second quarter.
Revenue rose 27% to $1.75 billion in the quarter from the year-ago period. Earnings rose to 22 cents
a share, from 19 cents.
Sales in the Americas rose to $995,000 from $696,000. Asia-Pacific sales, though, fell to $176,500
from $200,200.
Oracle Chief Financial Officer Jeffrey Henley recently spoke with IBD about the company's outlook
and last quarter.
IBD:
What were some third-quarter highlights?
Henley:
Our database business, our whole Americas business, basically turned around. We've had a difficult
second quarter because of the reorganization that we did. It caused us to mis-execute. So we were
really pleased that our Americas business got back on track, and that drove our database,
applications and all of our businesses.
IBD:
How did Oracle improve?
Henley:
It was just a case of time. We had reorganized. It just takes time for people to get used to the new
organization. We had misjudged how complex (the reorganization) was going to be, so it took us
longer. We got back to normal in the third quarter after performing at abnormally low rates in the
second quarter in the U.S. That really gave us a nice boost. We surprised the analysts and really
proved that our database business is healthier than maybe people thought it was.
IBD:
How is Oracle mitigating the effect of Asia's economic troubles?
Henley:
The only way we know how to mitigate it is to get more conservative on our spending. So we've
definitely slowed down some of our hiring, to get the spending back in line with Asia not doing well.
We're assuming things probably won't get a lot better over there for at least a year. We don't think
it's something where the problem is just going to go away tomorrow. We're very bullish on Asia for
the long term. We think Asia is going to continue to be a fabulous part of the world.
IBD:
Analysts say IBM Corp. is a significant threat to Oracle's database sales. How does Oracle position
itself against IBM?
Henley:
They've owned the mainframe business for years. They've been trying to get into the Unix business
erver-based networks) for years. I don't know that they've had much success. IBM is certainly a good
company and they do really well in the mainframe area, but I'm not sure that they're ever going to
be much of a threat on Unix. We compete with them because customers at the very high end have to
decide between mainframes and Unix.
IBD:
How is Oracle fending off Microsoft Corp.?
Henley:
Microsoft is a very different type of competitor. They compete in what we call the low end. Their
technology is underpowered. It doesn't scale. It has a lot of limitations. But Microsoft has a great
brand name and they're able to sell a lot into small situations. (IBM and Microsoft) are both good
competitors, but I think we're doing well against them. We have the No. 1 NT market share in the
world and we have the No. 1 Unix market share in the world.
IBD:
On the application software side, how is Oracle positioning itself against SAP AG and PeopleSoft Inc.?
Henley:
We continue to compete vigorously with them. All of us are doing well. The applications business has
been very strong. We all try to find the reasons to convince customers why we're different. Oracle
stresses its technology. I think we have better information management. We're global like SAP, so we
have global advantages over a smaller company like PeopleSoft.
IBD:
How have customers responded to Oracle's newly introduced Java-based application software, which
aims to be ''write once, use everywhere,'' a key aspect of database-reliant thin clients and network
computers?
Henley:
The (Java-based software) just came out, so we have to get more customers to install it. We have
seen very strong acceptance. Customers see the benefits of going to what we call thin-client
technology. IT (information technology) people see it as a way of making their installation go faster,
reduce costs, improve performance and so forth.
IBD:
When will more customers adopt the software?
Henley:
I think it will happen over the course of a couple of years. But in a year, I think a lot of our customers
will have moved to (Java-based applications).
IBD:
How key is Java to Oracle's plans?
Henley:
I think it's very key to our database business and to our applications business. It's a big belief test
that we've made, that there's a new generation of computing. Client-server as we've known it is
passe. We think thin client is the way to give people the benefits of client-server, but a lot more
efficiently, and to really move to an Internet world. |
