It's All Gravy For Oracle's Ellison

Oracle CEO and multi-billionaire Larry Ellison wrapped up what was, perhaps, the most important week of his company's year by selling off another 1 million shares of Oracle stock.

According to a Form 4 filing with the Securities and Exchange Commission, Ellison sold the shares as part of a prearranged trading plan on Friday, one day after Oracle's OpenWorld conference concluded in San Francisco.

The shares were sold for $20.68 a share, netting Forbes's No. 11 wealthiest person in the world another $20 million and change. His net worth was estimated at roughly $21.5 billion.

Oracle last week unveiled a series of new products to more than 43,000 OpenWorld attendees, including Oracle VM, the company's first virtualization software offering.

On Wednesday, IT consulting and research firm Saugatuck Technology issued a report suggesting Oracle and other virtualization software vendors still have plenty of time to gain ground on industry leader and Wall Street darling VMware.

"Easier management of virtual infrastructures is critical to broader and accelerated adoption of virtualization," analyst Charlie Burns wrote in the report. "Oracle offers single-source support which addresses some of the challenges of problem management when running Oracle on Linux in a virtual server."

Oracle VM will support Linux and Windows servers and is based on the Xen open source hypervisor. Oracle, which isn't charging for the software but plans to sell service contracts for updates, bug fixes and other support for either $499 or $999 a year, has tacked on a Web-based management console for server administrators to easily migrate and manage applications and operating systems running on both virtual and physical servers.

Oracle shares dipped 32 cents, or 2 percent, to $20.37 a share in Wednesday trading. The stock has fluctuated between $15.97 a share and $23 a share in the past 12 months.

Author: Larry Barrett @ internetnews.com

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SAP axed TomorrowNow execs to avoid black eye over Oracle suit

Analysts on Tuesday said that SAP AG's move to part with key executives at its TomorrowNow subsidiary is likely an attempt to repair a public image that has been tarnished by allegations that TomorrowNow employees illegally downloaded confidential data from Oracle Corp.'s Web site.

The alleged activities of workers at Bryan, Texas-based TomorrowNow are at the epicenter of a lawsuit filed by Oracle in March over alleged illegal software downloads of customer support materials by workers at the subsidiary.

SAP officials declined Tuesday to comment on the resignation of TomorrowNow executives beyond Monday's statement that it is weighing "several options" for the subsidiary, including its possible sale. TomorrowNow, which provides services-based support and maintenance for Oracle-owned PeopleSoft Inc., Siebel Systems Inc. and J.D. Edwards & Co. technology, was acquired by SAP in January 2005.

Noting that SAP is the type of company that "doesn't like to look bad in public," Marc Songini, an analyst at Wellesley, Mass.-based Nucleus Research Inc., said this week's actions show that the ERP software vendor is making a concerted effort to wash its hands of TomorrowNow's suspect actions.

"Whether or not there's any real culpability from the parent company [SAP] as far as illegal downloading, they don't want the black eye," Songini said. "So you had to figure somebody's head was going to roll. Obviously, it doesn't look good for SAP that it's doing this."

Ray Wang, an analyst at Cambridge, Mass.-based Forrester Research Inc., said the departure of TomorrowNow top executives allows SAP to create a "fresh start" and reassures customers that such activities won't occur again.

"SAP's decision to remove the [TomorrowNow] management team is really just another part of the process of building credibility and accountability in that organization," said Wang. "Going forward, I think this really helps with the customers."

Wang did call departing TomorrowNow CEO Andrew Nelson and some other officials "pioneers" in third-party software maintenance. In particular, Wang said Nelson -- and his former TomorrowNow colleague Seth Ravin, who left the firm in 2005 to found another third-party support firm, Rimini Street Inc. -- should be recognized for helping to expose unfair costs and practices historically attributed to third-party software maintenance.

"[Nelson] really had a place and a role to play in terms [of] helping customers see 'what am I really getting for my maintenance dollars.' Too bad it had to end this way for [him]," remarked Wang.

Wang said that Rimini Street could be a viable alternative for existing TomorrowNow customers if SAP sells its subsidiary. He also speculated that Rimini Street could be a potential buyer for the firm.

Author: Brian Fonseca @ www.computerworld.com

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Five Reasons Why I Think Oracle Will Buy Salesforce.com

Marc Benioff says Salesforce.com is on target to hit $1 billion in revenue next year, but I don't think it will happen. I predict that before Salesforce.com hits that run rate as an independent, publicly traded company,Oracle (NSDQ: ORCL) will buy it.

This is nothing more than an educated hunch, but a strong enough one that I'm willing to put my name on it. Here's why I think it will happen.

1) The troika of Larry Ellison, Charles Phillips, and Safra Katz has indicated it's going to keep on acquiring, and some of those acquisitions will be big companies. I think Marc plans to eventually sell Salesforce.com, and I think Oracle is one of few companies that could afford it. There's Microsoft and IBM, but….

2) Oracle "gets" Salesforce.com, and Salesforce.com "gets" Oracle. I lived many years in Silicon Valley and San Francisco, and I've talked to many folks at IBM and Microsoft over the years. Salesforce.com's culture wouldn't fit well with either. Marc, who came out of Oracle, is outspoken, flamboyant, yet casual, while also unnervingly quick and cutthroat. Kind of like Larry. That's the Silicon Valley executive personality, and I don't see it meshing with the folks at IBM and Microsoft.

3) But would Oracle even want Salesforce.com, you ask, considering its teeny profit margin? I admit, that's not a great selling point. Ellison even said in a conference call with investors a few months ago that "no one has figured out how to make money off of SaaS." Still, Salesforce.com has other things to offer, and the first is mindshare. Most customers have been happy with Salesforce.com, and happy with the savings they get from the software-as-a-service model. About 5 out of 6 CIOs I talk to have at least some passing interest in SaaS. Whether it makes vendors high profits or not, Larry isn't going to stop the tide of SaaS, if that's what customers want. Salesforce.com has the reputation for quality SaaS, and has succeeded where others have failed. (By the way, what the heck ever happened to Siebel On Demand?) The second thing Salesforce.com has is ...

4) Customers. Salesforce.com keeps piling them on, adding another 2,800 in the quarter to a total of 38,100. Benioff said in a conference call yesterday that Citigroup had signed on for 30,000 users of Salesforce.com sales and marketing software. Which gets us to how I think Ellison will make money off SaaS: By buying Salesforce.com and up-selling and side-selling those customers with other things in what vendors like to call the "software stack." I don't know how much Oracle stuff Citigroup uses, but I'm sure Larry's got new things he could offer up from his growing bag of tricks. And some of that stuff in the bag is pricey licensed software, not that low-margin SaaS stuff.

5) Going back to point No. 1, I think Marc would consider a reasonable offer because he hasn't said he wouldn't. I've talked to several CEOs who’ve vehemently declared they're "not for sale" and then sell a few months down the road. When I sat down with Marc at the Software 2007 conference in May and asked him if Salesforce.com was an acquisition target, he said: "We're probably too big forSAP (NYSE: SAP). It's hard to say [about other possible suitors]. We're a very different company, very unique. Whether it's our distribution model or our philanthropy model, it's very different than a traditional software company. It would take a lot of work." When I asked specifically about Oracle, he waved it off as a no comment.

In fact, I bet Marc and Larry and/or Charles already have had some talks, and Benioff is conflicted over whether he'd want to sell Salesforce.com. He's a strong personality who wants to make his mark in the world, whether it's leading the charge on changing the traditional licensed software model to SaaS or showing other software companies, like he refers to above, how to be generous with their money to those in need. He wants to make a difference in the world, the sure sign of an idealist.

But while Salesforce.com reported a 48% year-over-year growth in revenues in its third fiscal quarter announced yesterday, growth has been steadily and consistently declining. Some analysts insist the stock is over-valued. As Neil Young sang, "It's better to burn out, than to fade away." Idealists who want to change the world don't fade away. Unless Benioff has a sure plan to reverse that growth and grow margins, and stave offMicrosoft (NSDQ: MSFT) and SAP in the world of SaaS, he'll sell before Salesforce.com fades into something less meaningful, and with less mindshare than it's got today. Oracle -- if it can make the purchase make sense for its shareholders -- is the most logical buyer.

Author: Mary Hayes Weier @ www.informationweek.com

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