Oracle Chmn: Chance For $1B Middleware Rev In FY06
DOW JONES NEWSWIRES
October 10, 2005 2:49 p.m.
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By Chris Reiter
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Oracle Corp. (ORCL) sees a "chance" for its middleware business to generate about $1 billion in revenue this fiscal year, said Chairman Jeff Henley at the software maker's annual shareholders meeting, which was Webcast.
Oracle posted revenue of $853 million for its middleware business in fiscal 2005.
The software maker is expected to post total revenue for the year ending at the end of May 2006 of $14.2 billion, according to Thomson First Call.
The Redwood Shores, Calif., company has said it is considering making its middleware business its third division, alongside databases and applications. Currently, middleware is lumped in with Oracle's much larger database business.
Responding to an investor question, Oracle Chief Executive Larry Ellison said he believed that stock buybacks and acquisitions were a better use of the company's cash than paying out a dividend, but he didn't rule out paying a dividend in the future.
"Our judgment is that stock buybacks and acquisitions are better at driving value over the long term than dividends," said Ellison. He called shareholder demands for a dividend "not unreasonable."
Ellison acknowledged that the company's ongoing strategy of buying up rival software vendors was contributing to the company's lackluster stock performance in recent months.
He said Oracle's "unconventional" strategy and "different way of valuing" acquisition targets based on installed customers appeared to be "keeping people on the sidelines."
Oracle's shares have been fairly flat over last couple years. Ellison lamented that the company's stock performance doesn't reflect its earnings growth.
Oracle in recent years has pursued an aggressive acquisition strategy, playing the role of industry consolidator. Its latest big move came last month, when it agreed to pay $5.85 billion for Siebel Systems Inc. (SEBL), the leader in software that tracks customer data and assists sales staff.
If the deal closes as planned in early 2006, Oracle will have spent more than $17 billion on acquisitions in the span of about 12 months, a shopping spree highlighted by the hostile takeover of PeopleSoft after an 18-month battle.
Oracle is chiefly building up its business management applications business. The company hopes applications spur more sales of its databases and middleware products.
Ellison said that middleware vendor BEA Systems Inc. (BEAS) is less of an attractive takeover target now than it was a couple years ago, echoing comments made recently by Oracle President Charles Phillips.
Oracle was seen as closely eyeing BEA as a potential acquisition. BEA has struggled generating new revenue in recent quarters.
Despite the diminished interest in BEA, Ellison said there were still plenty of acquisition targets on the market, but didn't mention any names or segments of particular interest.
Ellison said he expects consolidation in the software sector to continue for the next five years or so. In the past, he's said that he expects only a few large players to survive the industry shakeout, including Oracle, Microsoft Corp. (MSFT), International Business Machines Corp. (IBM), and SAP AG (SAP).
Oracle shareholders voted to reelect the 11 members of the company's board of directors; approved the executive compensation package, which includes paying costs of about $1 million a year for security for Ellison's estate; and reappointed Ernst & Young as the company's accountants.
Oracle shares were recently up 0.2% at $12. |
