The Oracle speaks

By PETER GRIFFIN

In his tailored black suit and T-shirt he could be mistaken for an ageing rock star, an Eric Clapton-esque figure growing old with style and in style.

Fit and tanned, Larry Ellison looks a decade younger than his 58 years. But rock star is one of the few things Ellison is not.

A multibillionaire, hot-shot salesman, skilled yachtsman, jet pilot and head of the second-largest software company in the world, Ellison, like Richard Branson and Steve Fossett, has used his wealth to tick off a personal wish-list of must-dos, the America's Cup among them.

He's also not afraid to speak his mind.

"The question is absurd ... You're wrong ... That's nonsense ... What you're saying is not true ... " he indignantly tells a group of international journalists gathered to interview him in the Sheraton hotel.

Everyone wants to know why Ellison is swanning around the South Pacific when his company, Oracle, is struggling through the worst patch the IT sector can remember.

For Ellison the answer is easy.

"Should I be in the America's Cup? Should I own a second car?"

He has stockpiled his holiday leave for two years to take an extended spell to run his cup campaign, which, Ellison is at pains to point out, is completely funded out of his own incredibly deep pocket to the tune of about US$85 million ($178.2 million).

"Oracle didn't put a dime into this, not a dime. Oracle doesn't even own my chair at the office. I do.

"Oracle doesn't own the art on my walls. Oracle doesn't own the plane I fly around in. It all comes out of my pocket," he says self-righteously.

With a couple of wins under his belt in the Louis Vuitton Cup, Ellison's cup debut couldn't be going better. Unfortunately, the same is not true for Oracle.

"From an Oracle standpoint we're at a historic low," admits Ellison. "We have the same price-earnings ratio, pretty much, as IBM. The stock, I think, is remarkably low."

But, says Ellison, the company is extremely profitable and generates good cashflows. Oracle had earnings of US$343 million in the three months to August 31, a 33 per cent drop on a year ago.

"Last year, during the most difficult downturn in the history of the computer industry, Oracle delivered record profit margins, over 30 per cent," he points out.

The college drop-out is comfortable talking about subjects ranging from the dismal state of the IT sector to the design aspects of traditional Japanese gardens.

His high-level peers in the IT industry are seldom as forthcoming.

While many have cringed at the increasingly commercial nature of the America's Cup, Ellison fully endorses it, reasoning that at the end of the day the sailors - those putting their hearts and souls into the racing - stand rightfully to prosper.

Everything from baseball teams to orchestras should carry corporate sponsorship, says Ellison.

"To talk about the commercial versus the athletic like they're different, I think, is a fundamental misunderstanding of sports - it's a business."

Ellison points to a sporting world where wealthy tycoons like himself own United States baseball teams and where media mogul Rupert Murdoch made a billion-dollar offer for the Manchester United football club - and was turned down.

"Sports is big business," says Ellison matter-of-factly.

"Rupert Murdoch once told me there are only two things important in television - sports and sports."

Any heat Ellison is feeling from well-funded syndicates on the Hauraki Gulf is matched by the stiffening competition Oracle faces from its traditional IT rivals.

Billboards and newspaper advertisements paint a picture of Oracle locked in a death match with arch-rival IBM. But Microsoft, headed by the richer but less flamboyant Bill Gates, is much more of a threat to Oracle.

It is the only company standing between Ellison and total domination in the software market.

Oracle is increasingly muscling in on the corporate space of Microsoft and a bunch of other software makers - SAP, Peoplesoft and Siebel Systems among them.

A major new release from the company, Oracle Collaboration Suite, will compete head-to-head with enterprise software products from IBM, Microsoft and a raft of smaller players.

The software lets users store information from emails, voicemails, shared folders and group calendars in an Oracle database.

Ellison says it's technically better than anything Microsoft has produced and is without the poor security record tainting Microsoft's email products.

"The thing about Microsoft is they have a monopoly and during an economic downturn they can double their prices," says Ellison.

"Everyone else is lowering their prices and Microsoft is increasing theirs."

In an industry where big sales have dried up as corporates tighten their IT spending, Oracle's reputation for using aggressive sales tactics has come under new scrutiny.

This year the California Government rescinded a US$95 million software deal it had struck with Oracle, claiming it would cost the state more than if it had bought standard database licences.

If Ellison is king of the hard-sell he makes no apology for that. He describes the California Government's reaction as the "strangest complaint I've ever heard in my life".

"Ever seen a store cut prices in half? I bet people go in there and buy stuff they don't need."

Not one to dabble in the sharemarket, Ellison sees the global recession as a state of mind.

"What drives the market down is the assumption that it will continue to go down," he says.

Ellison says the market will come back. When prospects look better, a couple of quarters away, Oracle will look into building its proposed development centre in New Zealand, possibly in the Bay of Islands.

In the meantime he is happy to explain his fascination with Japanese culture - an interest that goes far beyond christening his boats with names like Katana, Ronin and Sayonara.

Japanese landscape architecture, the "most exquisite art" he has ever seen, is what gets Ellison excited.

He feels a primal connection with Japanese gardens - the wind in the bamboo, the smell of pine needles, the sound of running water.

"Almost everybody loves the sound of running water. Why? When we're in that environment we feel reassured. We feel safe."