SAN FRANCISCO (AP) — Oracle’s fiscal first quarter showed the company being tugged in two directions at once.
Its business software business is booming, with revenue from new licenses up 17 percent to $1.5 billion. Its server business is not, with hardware revenue down 5 percent to $1 billion.
Oracle attributes the declines in hardware to a corporate decision to shed unprofitable deals, particularly those involving so-called x86 servers that use chips from Intel Corp. Oracle bought its server business last year in its $7.3 billion deal for Sun Microsystems. Some analysts are concerned that a decline in market share shows that Oracle’s losses aren’t entirely voluntary.
On a conference call with analysts Tuesday to discuss Oracle’s latest results, CEO Larry Ellison offered his thoughts on how well the hardware turnaround efforts are going.
QUESTION: On the hardware business — where do you think you are in turning the business around, and what gives you confidence going forward there?
ANSWER (Ellison): “I don’t care if our commodity x86 business goes to zero. We don’t make any money selling those things. We have no interest in selling other people’s (intellectual property). Commodity x86 includes Intel IP, Microsoft. We don’t make money selling that. Sun sold that stuff. And we are phasing out that business. We have no interest in it whatsoever. We have interest in selling systems that include our IP. That’s how we’re going to drive the profitability of our overall hardware business. Eventually and I think actually in fairly short order our engineered systems will be growing at such a high rate that the overall hardware business top line will grow also.”