“No one is better positioned” than Oracle to grow, Hurd says during an earnings conference call
Former Hewlett-Packard CEO Mark Hurd made his first public comments on Thursday since taking a job as Oracle co-president, saying the company is poised for major expansion.
“The growth opportunities with highly optimized, engineered systems are just starting … and no one is better positioned than Oracle,” Hurd said during a conference call about Oracle’s first-quarter earnings results. Hurd is heading up sales, marketing and support at Oracle.
He left HP last month after a scandal involving his relationship with a contractor and the alleged falsification of expense reports.
HP has sued Hurd, arguing that he will not be able to perform his job at Oracle without violating a confidentiality agreement tied to his severance package. Oracle CEO Larry Ellison declared the suit “vindictive” and said it has placed the two companies’ long-time partnership in jeopardy.
Hurd, who has been criticized by no less than IBM CEO Sam Palmisano for cutting research and development at HP, cited the “sheer size” of Oracle’s R&D budget as a key asset.
Although it will be Hurd’s job to fulfill Oracle’s ambitious growth plans, it’s not as if he’s starting from scratch.
Oracle’s first-quarter revenue jumped 48 per cent over the same period last year to US$7.5 billion, helped by strong software license and hardware sales, the company reported Thursday. Net income was up 20 per cent to $1.4 billion.
New software license revenue, a key indicator of growth, jumped 25 per cent to roughly $1.3 billion.
Hardware systems revenue, another keenly watched metric following Oracle’s purchase this year of Sun Microsystems, was $1.69 billion. That figure represents a drop from the $1.83 billion in fourth-quarter hardware sales Oracle reported in June following its first full quarter of Sun ownership. However, Oracle typically does a disproportionate amount of business in the fourth quarter.
Beyond revenue growth, Oracle has been trying to increase hardware profits by dropping non-lucrative reseller agreements, optimizing operations and laying off “non-revenue-producing” employees, Ellison said during the conference call. Oracle believes it can double the size of the Sun hardware business, but it will take some time, he added.
The worldwide sales pipeline for Oracle’s Exadata database machine is now more than $1.5 billion, Ellison said. Exadata boxes use Sun hardware along with Oracle software and can handle both data warehousing and transaction processing.
Exadata is key to Oracle’s vision of selling customers integrated systems. Two new Exadata products will be announced at Oracle’s OpenWorld conference, which begins Sunday in San Francisco.
Meanwhile, contrary to some recent speculation, Oracle is not planning to make major investments in services to help it sell integrated systems and compete with IBM, according to Ellison.
“IBM’s services business seems to be the dominant part of their business. The product part is important but secondary, if you will. We see it as just the reverse,” he said.
For one, well-engineered systems mean customers won’t need as many services, he added. “Having said that … we can’t eliminate all of the services, that’s just a fantasy. You’ll see us engaging customers and giving them services because they want us to.” But partnerships, including with IBM, will remain important, he said.
Hurd also weighed in on the services topic, saying that “the future of services is software.”
“When you automate a process you not only reduce the labor, you eliminate the labor,” and improve the service quality at the same time, he said.