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Technology Stocks : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: lml who wrote (15159)	12/15/2000 8:11:25 PM
From: bob zagorin	Respond to of 19080

Oracle's Ellison Sees Progress in War With Microsoft Redwood City, California, Dec. 15 (Bloomberg) -- Oracle Corp. Chief Executive Larry Ellison says he's gaining ground in efforts to oust Microsoft Corp. as the largest software maker, benefiting from a decision to make all Oracle products Internet-friendly. The shares of Oracle, the No. 2 software maker, gained $1.06, or 3.9 percent, to $28.56 after it released fiscal second-quarter results that beat forecasts, largely thanks to growing sales of new business software designed to work on the Internet. Microsoft tumbled $6.31, or 11 percent, to $49.19 after yesterday cutting sales and earnings estimates through June. It blamed a slowdown in global personal-computer sales. Oracle is ahead of Microsoft in developing Internet software. Ellison, who founded Oracle in 1977, has spent five years pushing engineers to design new Internet-compatible products, some of which helped boost sales in the most recent quarter. ``It's our time to shine,'' Ellison said in an interview. ``Microsoft missed the Internet by five years. You can't be five years late in my industry.'' Today's activity in the two stocks means that Ellison's stake in Oracle is worth more, at $39.4 billion, than Bill Gates's stake in Microsoft, at $35.99 billion. Gates has ranked as the richest man in the world for the past seven years. Dueling Strategies Microsoft's Internet strategy is based on a program dubbed .Net (``dot-net''), which the company says will one day make the Internet itself the basis of a new operating system for computers. Microsoft has said it won't see significant revenue from .Net products for about two years. That two-year timeframe has prompted Ellison to ridicule Microsoft by giving Oracle's strategy a similar nickname -- ``dot- now.'' Ellison frequently makes sarcastic comments about rivals including Microsoft and International Business Machines Corp., painting them as first- and second-generation technology companies that are about to be overtaken by Oracle. Still, his company is far behind Microsoft in terms of market value. Microsoft outstanding shares are worth about $262 billion, compared with about $160 billion for Oracle. Ellison's company has already surpassed the market value of IBM, which is about $154 billion. Linked to PCs For now, Microsoft's fate is closely linked to that of the PC industry. About 69 percent of the company's sales in the quarter ended in September came from products that work on PCs. The company yesterday blamed its disappointing news on slowing consumer purchases of PCs, which run on its Windows operating systems, and a decline in PC software. Ellison's strategy is centered on his belief that virtually all PC-based software will eventually be replaced with products designed for the Internet that run on powerful server computers. Investors have been skeptical that the approach will pay off. Oracle shares tumbled 42 percent during the quarter that ended Nov. 30. It was the stock's worst performance in any quarter since the company went public in 1986. The widespread concern that Oracle 11i applications suite might not live up to expectations prompted Ellison to compare himself to the scientist who discovered that the Milky Way was full of stars and that the moon was covered with craters. ``We're faced with the same problems Galileo had,'' Ellison said at a Monday press conference. ``We're saying that this is a good idea and everybody is saying we are wrong.'' Microsoft has long rejected Ellison's approach. Chief Financial Officer John Connors yesterday said he expects the company to recover from the current slowdown. ``The PC is far from dead,'' he said. Microsoft blamed part of its shortfall on an inability to boost revenue from its MSN network of Web sites -- another example of the contrast between how Microsoft and Oracle have fared in efforts to profit from the surge in growth of the Internet. Late Arrival ``Microsoft was late to get in the game,'' said Melissa Eisenstat, a CIBC World Markets analyst, who has ``buy'' ratings on Microsoft and Oracle. Oracle yesterday said second-quarter fiscal profit rose 62 percent, as sales of business-applications software surged 66 percent to $279 million. In May, the company introduced Oracle 11i, a suite of those products designed to be completely Internet- compatible. Ellison claims that using the Web-friendly products in its own business helped Oracle save more than $1 billion. Ellison said he hasn't seen a drop in demand for Oracle products because they're not designed for PCs. Oracle can weather an economic slowdown because its software helps companies cut costs in tough times, he said. Still, analysts and investors said that Oracle's outlook could change dramatically with little notice. ``No one is recession-proof. No one,'' Eisenstat said. ``I don't care who they are.'' And even after Microsoft's warning yesterday, Oracle's got to sell a lot more software before it catches up. Microsoft is forecasting that its revenue will grow to more than $25 billion in its current fiscal year, which ends June 30. Oracle is expected to report revenue of less than half that amount -- $11.9 billion -- for the fiscal year that ends in May, the average forecast of analysts polled by IBES International. Dec/15/2000 17:47 ET