Oracle CEO sees more deals as part of strategy

Michael Kahn

SAN FRANCISCO: Oracle Corp. Chief Executive Larry Ellison said his company was targeting business intelligence software and middleware companies as part of its aggressive acquisition strategy.

Ellison told a Credit Suisse investor conference that the business intelligence and middleware market -- which he considered as one -- represented an area where Oracle was clearly not the leader and needed to make deals to gain a leading position.

"We are clearly not No. 1 in middleware," said Ellison, whose remarks were Webcast. "You will see us do a number of things in that space, including acquisitions."

Middleware companies produce software tools that connect different applications while business intelligence applications help firms mine mountains of information stored in databases and use the data to detect marketing trends and patterns.

Over the last two years, Oracle has spent some $19 billion aggressively buying up rivals as it seeks to better challenge SAP AG, the leading maker of software used by big companies to aid in automating everything from human resources to accounting to inventory management.

He did not give any details on potential targets or how much the company might spend. But Oracle Chairman Jeff Henley said last week that smaller deals in 2006 and 2007 were more likely as it digests its large Siebel and Peoplesoft acquisitions.

Ellison also told the investor conference the reasoning behind the strategy to buy its way to the top is that the lion's share of the profits go to the No. 1 application provider for a given market.

"We want to be No. 1 in all the segments," Ellison said. "It is not for vanity. If you are not No. 1, you don't make much money."

Ellison also said Oracle, which is the leading database software maker, had enough cash after its acquisition spree to continue buying back stock at a pace similar to the last several years.

Ellison also predicted a growing number of customers would look to Web-based applications, a fast-growing market he predicted would be key in the future for his Redwood Shores, California-based company.

He said Oracle's sheer size would also help the company eventually overtake Salesforce.com which he acknowledged would lead the Web-based application market for the near future.

Salesforce has enjoyed dramatic growth as more companies use its software, which is stored on its services, through a Web browser on a PC or other Internet-connected device. The customer then doesn't have to buy the software, install and maintain it.

"We believe it is a key portion of our future," Ellison said.