Wednesday July 5, 3:08 pm Eastern Time
Forbes.com
Why Ray Lane Left Oracle
By David Einstein
The abrupt departure of Oracle President and Chief Operating
Office Ray Lane is going over like a lead balloon on Wall Street.
Oracle's (Nasdaq: ORCL - news) stock fell $3.88 to $80.19 on July 3 as investors reacted to
the news. And the shares continue to fall today, losing more than $6 in afternoon trading.
The fear is that without Lane, mercurial Chief Executive Larry Ellison may not have the
ballast he needs to keep the giant database company on course.
Did Lane quit or was he fired? The June 30 announcement from Oracle headquarters in
Redwood Shores, Calif., failed to give a clue as to why Ellison's second banana for the past
eight years suddenly was cleaning out his office. Given the succinct nature of the press
release (two paragraphs and 76 words), however, it was clear regardless of the
circumstances, Oracle had not planned the departure in advance.
Ellison moved quickly this week to consolidate his power, annexing the president and COO
titles, and announcing that Lane will not be replaced. At the same time, he created an
executive team--marketing chief Gary Bloom, Chief Financial Officer Jeffrey Henley and
Executive Vice President Safra Catz--that ostensibly will help manage Oracle's day-to-day
affairs. In reality, the team will have about the same influence as the Cuban parliament.
There was speculation that Lane was taking the fall for Oracle after the discovery last week
that the company paid a detective agency to dig up dirt on Microsoft. However, Oracle
officials denied any connection between the events.
What's more likely is that Oracle simply outgrew Lane. A sales and marketing whiz, he
rescued the company from financial troubles in 1992 and put together an organization that
set the pace for customer relations in the software industry. But Oracle's business has
shifted dramatically to the Internet, reducing the need for traditional sales and service
practices.
The past couple of years have been great for Ellison, who has led Oracle's charge onto the
Internet. Today, the company provides the database component for virtually all of the top
online commerce sites. Oracle has earned $6.3 billion in the past 12 months on sales of
$10.1 billion. And Ellison--now the second richest man in the world behind Bill Gates--is
basking in Oracle's success.
As Ellison's visibility soared, Lane started to disappear, making his departure a question of
when and not if. In the past couple of years he has looked around for another gig. He
reportedly was on the short list for CEO jobs at Novell (Nasdaq: NOVL - news), Electronic
Data Systems (NYSE: EDS - news) and Compaq Computer (NYSE: CPQ - news). To keep
him relatively happy, Oracle gave truckloads of stock options.
Ellison obviously now thinks he can manage nicely without Lane. Some analysts aren't so
sure. ``Lane was a kind of foundation that kept Oracle sane,'' says Rob Enderle of Giga
Information Group. ``Larry almost took the company under once, and there is a great deal of
concern that he could do it again.'' Enderle cites the private investigation of Microsoft as an
example of the kinds of risks Ellison is known to take.
Don't feel sorry for Lane, who according to Ellison received some $2 billion of Oracle
options. He could go back to consulting, which he did at Booz Allen & Hamilton before
joining Oracle. Or he could go to an aspiring dot-com in need of a seasoned veteran leader.
One thing you can count on--he won't play second fiddle again.
Go to www.forbes.com to see all of our latest stories. |
