Interview: Oracle Chief Executive
>> oracle shares rose today in the wake of the company’s earnings report. sales up 26% last quarter, excluding one-time items, profit, 26 cents a share. three cents ahead of what analysts were expecting. for more on the performance as well as the outlook, erin burnett sat down with chief executive, larry ellison.
>> positive product cycle. our database businesses gaining market share. there are three studies out right now from gartner, i.b.c. and morgan stanley showing our database is taking share from our number one competitor in the database business, i.b.m. our middleware is taking share away from b.a.e. and our applications business is growing 52%. our applications business in north america grew 71%, so we’re taking share from s.a.p. and strength across the board from all of our businesses.
>> you mentioned a few of your key rivals. you mentioned database, the most profitable business, still. you mentioned i.b.m. will you take that number one spot back from i.b.m. in your fiscal 2006?
>> it’s interesting. gartner group has us in a virtual tie with i.b.m. at 35% apiece. gartner says we’re growing while i.b.m. is getting smaller. if you look at the i.b.c. report, i.b.c. has us at 41% market share, ahead of i.b.m. my personal favorite report is the morgan stanley report with us at 58% going to 70% and i.b.m. at 11% going to 9%. we think we’re well ahead of i.b.m. already. only gartner has us in a tie. but all three analysts agree we’re growing while i.b.m.’s database is shrinking.
>> if you’re growing there and you’re saying you’re number one. what about on the applications software side of the business when you’re competing with s.a.p. people are estimating you’re losing market share there.
>> our application business in north america grew 71%. we’re definitely gaining share now against s.a.p. there was an anomaly in the first quarter after we merged with peoplesoft. there was $275 million in peoplesoft application sales last year that were not recorded in either peoplesoft’s quarter or oracle’s quarter because we were in the middle of a merger that hadn’t closed yet. but, in fact, we have very strong applications growth. we’re at 52% this quarter, growing much faster than s.a.p. and in north america, we grew 71%. we’re number one in north america and taking share away from s.a.p. in that market . s.a.p. is clearly number one.
>> in terms of the actual numbers here, one report expecting your market share to be―how wrong do you think that number will be?
>> they’re going to are to revise those numbers because those are estimates before we reported this quarter that didn’t count that $275 million of peoplesoft revenue that went unreported last quarter so you look at our numbers now, drawing 52%. that’s much faster than s.a.p. is growing. we have to be taking share.
>> that was larry ellison, oracle’s chief executive. earnings out after the bell from 3com, reporting a loss of 15 cents a share, matching analysts’ estimates. sales were down 3.7%. however, they did come in stronger than analysts helping looking for, coming in at $177 million for the fourth quarter while analysts were looking for $172.5 million. sales down 3.7% but stronger than anticipated. keep in mind, for some perspective here, the chief executive has been slashing jobs, making acquisitions to boost profitable as the company loses out to cisco systems as well as juniper networks. also in focus after the close, comcourse. the company firing 16% of its u.s. work force at palmsource. palmsource, a company that makes software for handheld computers and mobile phones, said it would record another $2.7 million in restructuring costs in the current quarter. if you exclude the gain as well as costs, the company posts a loss of four cents a share and analysts expected a loss of two cents. shares down 9% in extended trade. shares into today’s close, down 26% this year. and there was a deal today involving darden corp. this is a company that makes mr. coffee appliances. it features the crock-pot. jarden paying $625 million to purchase holmes. headlines on the federal reserve, treasury secretary john snow and alan greenspan are to meet senator charles schumer to speak about china. they will meet senators. we are finding out this is on thursday on capitol hill. the headlines coming out just now. we know that treasury secretary john snow and fed chairman alan greenspan will meet senators schumer and graham to discuss china. it is scheduled to take place tomorrow on capitol hill. with that, we’re going to take a quick break. when we return, crude prices declining for the second straight day. we’ll bring you details.
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>> the independent chair continue is the capstone of a series of reforms that will foster a culture of a boardroom based on transparency, arm’s length dealing and protection of the interests of fund shareholders.
>> this sets up a legal showdown over the measured championed by william donaldson. peter cook, standing by in washington, will bring us details in a moment. first, let’s get you a check of how the markets settled. stocks did fall in anticipation the federal reserve will raise rates tomorrow and signal more rate increases are to come. we’ll have more on the markets in a few minutes. we want to bring you the details on the top story. certainly a contentious final meeting for william donaldson as he departs the securities and exchange commission. on a 3-2 vote, the s.e.c. adopted fund governance changes that had been rejected eight days ago by a federal appeals court. peter cook was at the s.e.c. and joins us with details. peter?
>> william donaldson not leaving the s.e.c. quietly. just one day before he leaves the agency and over the objections of fully on republican commissioners. donaldson today pushing through mutual fund governance changes he says are necessary to protect investors. the rule requires mutual fund boards to be 75% independent and board chairman to be independent, as well. the rule wasa adopted last year by the s.e.c., but challenged by the u.s. chamber of commerce. last week, a federal appeals court ruled the s.e.c. failed to adequately consider the cost of the changes and alternatives. donaldson scheduled today’s vote after concluding the problems identified could be remedied.
>> our failure to act, i fear, would throw the future of this rule-making into uncertain limbo until a new chairman is confirmed and he is able to familiarize himself with the rule-making record and policy consideration weighing for and against the decision we made last year.
>> as they did the first time, donaldson’s two fellow republicans on the commission opposed the rule again today, criticizing donaldson for bringing it up again so soon.
>> today’s action is nothing more than window-dressing. it violates the spirit, if not the letter, of the court’s opinion. which, in directing the commission to address the deficiencies, clearly contemplated that the commission would do so by applying its expertise and best judgment to bear.
>> the u.s. chamber of commerce calls the s.e.c. action outrageous and promises to challenge the new rule. overshadowed bue the mutual fund fight, the s.e.c. unanimously approved new guidelines for companies seeking to promote the sale of stocks and bonds, doing away with the quiet-period restrictions.
>> the change to the draft of offering communications, information dissemination and registration, will create a quiet revolution and make capital formation in the united states far more efficient and effective.
>> in addition to being donaldson’s last meeting as s.e.c. chairman, it marked the first meeting in the s.e.c.’s new headquarters. very memorable meeting at the s.e.c. today.
>> thank you. a u.s. judge considering whether to throw out a securities and exchange commission fraud case against former healthsouth chief executive richard scrushy. it comes after his acquittal on criminal charges yesterday. u.s. district court judge johnson setting a hearing date for july 7 and ordering the s.e.c. to show cause why she should not dismiss the civil suit filed against jush ne2003. recall, it was yesterday that jurors in birmingham, alabama, cleared scrushy of charges that he directed an accounting fraud in the company. the s.e.c. suit one of many that did occur while scrushy was chief executive. a―for its part, healthsouth does hope to oust scrushy at its shareholder meeting and that take place next year. research in motion, maker of the blackberry email passenger, saying first-quarter profit more than doubled to $132.5 million as sales increased 68%. shares are down 6% in extended hours. it comes after the company said it added fewer customers than expected and second-quarter sales may miss analysts’ estimates. as for the recent quarter just reported, net income climbing to 67 cents a share. it compares with 28 cents a year earlier. sales rising to $453.9 million from $269.6 a year ago. computer shares could not hold on to gains at the nasdaq today but transportation shares did. june grasso has details from the nasdaq marketsite.
>> transportation shares were the best performing group at the nasdaq today, as they were yesterday, with crude oil dropping more than $3 a barrel in two days. it was one of the few groups able to hold on to its advance today. one of the groups that started the day strong and bounced between gains and losses was computer shares, ending the day as one of the worst performing groups at the nasdaq. oracle was an advancer there. the most active stock on the nasdaq composite and among the top performer in the nasdaq 100 all day after fiscal first-quarter profit beat analysts’ estimates. microsoft also higher. bill gates saying that tokyo that new versions of the windows operating system and office word processing program will offer higher security and compatibility with other software, helping companies save costs. decliners in the computer group, apple computer, slashing prices more than 10% on some of its music players to defend its market share. today, it was one of the worst performing members of the nasdaq 100. google, trading below the $300 threshold reached monday, yesterday, also closing lower for the day and yahoo, one of the worst performers in the nasdaq 100. the two most used search engines are introducing software that lets independent programmers create customized online maps. monster worldwide was higher after the g.d.p. numbers. the operator of the most used website for employment advertising was rated overweight at prudential equity, which expects it to benefit from the shift toward online advertising and upswing in the employment market . i’m june grasso, bloomberg news.
>> let’s get more on today’s trading action with a report from deborah kostroun at the big board.
>> after seeing our biggest rally in five weeks yesterday, we did not see the followthrough in today’s session. a lot of reasons for that. one of the things that actually did help out the market , that was the fact that a.i.g. had better than expected earnings. then, of course, we have that fed decision coming out tomorrow. many traders waiting to see what the fed will say about interest rates. likely going to see interest rates going up a quarter of a percentage point. the big story on the day, the fact that oil dropped 94 cents a barrel, closing at $56.26, over the past couple of days, we’ve taken off 5.5% on crude oil. a mixed market with integrated oil. b.p. lower although raised to a buy at bank of america. other energy stocks mixed in the session but generally the s&p energy index was lower. speaking of indexes, the s&p insurance index, the biggest gainer in the 24 industry groups in the s&p 500. you look at the gainers in the dow jones industrial average, a.i.g. at the top of the list after their better-than-expected earnings. first-quarter profit rose 44% on asian life insurance businesses and gains from derivatives. financials taking a bullish cue from a.i.g.’s earnings. many of the financials performing quite well in today’s session. not only some of the insurance stocks related to financials, but other financials performing well. and 10-year yields below 4%. material stocks mixed on the day. many gold stocks performing well because the commodity increased the first day in four, but monsanto, number one developer of genetically engineered crops, retreating with a dropping third-quarter profit, related to write-offss for acquisitions of two feed companies.
>> one stock in focus after the close, b.m.c. software releasing fourth-quarter result, nine cents a share excluding items, a penny shy of analysts’ estimates. sales topping estimates, $395.1 million compared to the expected $391 million. this company makes programs managing corporate computer networks. on april 11, the company said it would cut 875 jobs or 12% of its work force in order to trim $100 million from costs this year. it was the second round of cost cutting for b.m.c. in the past few years. shares are down 6% over the past 12 months. after the break, we’ll have more on oracle. hear what the company’s chief executive has to say.
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