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Oracle beats up on BEA

Pinch Punch

Larry Ellison cited middleware rival BEA Systems to Wall Street as proof that Oracle can and will prevail over SAP in business applications and oRed Hat in Linux.

Claiming 82 per cent middleware licensing growth during his company's recent third quarter, the Oracle CEO claimed his compay grew up to 10 times faster than BEA during that company's recent fourth quarter.

Emceeing the Smackdown that has become Oracle's quarterly conference call with investors, Ellison noted BEA's annual revenue is barely larger than Oracle's net income for a single quarter. Obviously, Oracle is considerably older, much larger and has the advantage of wrapping in applications and databases with its middleware. But BEA built a quick market share lead over Oracle in the late 1990s and early 2000s in middleware using WebLogic, while Oracle focused its attention on databases and applications. Since then Oracle has clawed back some of the lead.

"It took us five years to catch and pass BEA [in middleware], but we did it, through acquisition and innovation," Ellison said.

Ellison next turned to Linux support. Oracle has experienced a backlash since announcing Unbreakable Linux Network (ULN) in October. Some investment analysts believe ULN "must" be failing since Oracle has not announced a single major customer in the service's first five months.

Claiming Linux contracts of $500m-plus and a Yahoo! support deal that displaced Red Hat, Ellison promised: "We are in the early days of our Linux support business, but we are off to a very solid start. This is just the beginning... we are not going to build the Linux business over night, but we will build it."

Then it was back to an older adversary as Oracle beat up on SAP. Ellison claimed 57 per cent new licensing growth in applications - a number inflated by $20bn of M&A - versus seven per cent for SAP's recent quarter. Oracle may be number two behind SAP in ERP, but ERP is growing slowly while SAP is trying to penetrate the small and medium space with "lots and lots of different ERP systems." "Our strategy is to have one suite that will be available on demand, for SMBs and big companies," Ellison claimed.

The final flick of the finger? A migration from a creaking SAP R/2 installation to Oracle by a customer in SAP's home town of Waldorf, Germany " We are gaining on them [SAP] consistently and rapidly," Ellison said.

Who needs financials with all this color? But, alas, this is Wall Street, and to the spreadsheets we must: Oracle reported a 35 per cent jump in net income for the three months to February 28 to $1.03bn, on total revenue that increased 27 per cent to $4.4bn, and earnings per diluted share of $0.20, up from $0.14. Total software revenue grew 25 per cent to $3.4bn while business from new licensing increased 27 per cent to $1.3bn.

Middleware, customer relationship management (CRM) and vertical-sector applications are Oracle's fastest growing businesses, with the database transitioning to more of a maintenance business, according to Ellison. He committed Oracle to selling more vertical-sector products to existing users of Oracle ERP and promised continued acquisitions in new markets. ®

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