1988: $.21/Share 2011: $33.10
Oracle Corporation
Oracle Corporation is an American multinational computer technology company that specializes in developing and marketing hardware systems and software products, particularly database management systems. Headquartered in Redwood Shores, California, the company employs 105,000 people worldwide. Over the years, Oracle has become a corporate behemoth through organic growth and many acquisitions. By 2007 Oracle had the third-largest software revenue, after Microsoft and IBM.
The corporation is probably best known for its flagship product, the Oracle Database. The company also builds tools for database development and systems of middle-tier software, enterprise resource planning software, customer relationship management software, and supply chain management software.
Larry Ellison, a co-founder of Oracle Corporation, has served as Oracle’s CEO throughout its history. He also served as the Chairman of the Board until his replacement by Jeffrey O. Henley in 2004. In 2008, the Associated Press ranked Ellison as the top-paid chief executive in the world.
ORACLE BEGINS
Ellison’s original inspiration came from a 1970 paper written by Edgar F. Codd on relational database management systems named “A Relational Model of Data for Large Shared Data Banks.” He had also heard about IBM’s System R database from an article in the IBM Research Journal provided by Ed Oates, a future co-founder of Oracle Corporation. Ellison co-founded Oracle Corporation in 1977 with Bob Miner and Ed Oates under the name Software Development Laboratories. In 1979 the company’s name was changed to Relational Software, Inc., and in 1982 became Oracle Systems to align itself with its flagship product, Oracle Database. In 1995, there was a final name change to Oracle Corporation.
Part of Oracle Corporation’s early success arose from using the “C” programming language to implement its products. This enabled Oracle to port to different operating systems. This gave Oracle an advantage over companies using operating-system-specific languages.
ORACLE’S GROWS THROUGH ACQUISITIONS
The revenue from its wildly successful products enabled Oracle to begin acquiring companies in 1994:
In 1994 it acquired the Rdb Division of Digital Equipment Corporation
In 1995 it acquired IRI Software
In 1999 it acquired Thinking Machines Corporation
In 2002 it acquired TopLink, Indicast, NetForce and Steltor
In 2003 it acquired Reliaty
In 2004 it acquired SiteWorks Solutions, Phaos, and Collaxa
In 2005 it acquired PeopleSoft, Oblix, Retek, TripleHop, TimesTen, ProfitLogic,
Context Media, i-flex (Oracle Financial Services), G-Log, Innobase, Thor Technologies, OctetString, and Temposoft
In 2006 it acquired Siebel Systems, Sleepycat Software, HotSip, Portal Software,
Net4Call, Demantra, Telephony@Work, Sigma Dynamics, Sunopsis, MetaSolv
Software, Stellent, and SPL WorldGroup
In 2007 it acquired Hyperion Solutions, AppForge (intellectual assets only), Agile
Software Corporation, Bharosa, NetSure Telecom Ltd., Active Reasoning, Inc.,
Bridgestream, LogicalApps, and Moniforce
In 2008 it acquired BEA Systems, Captovation, Empirix (Web), LODESTAR
Corporation, AdminServer, Skywire Software, Global Knowledge Software,
ClearApp, Primavera Systems, Advanced Visual Technology, and Haley
Limited
In 2009 it acquired mValent, Relsys, Virtual Iron Software, Conformia Software
(intellectual assets only), Sun Microsystems, HyperRoll, and Sophoi
In 2010 it acquired Silver Creek, AmberPoint, Convergin, Phase Forward,
Secerno, Passlogix, and Art Technology Group, Inc.
ROAD BUMPS
Oracle’s meteoric rise has not come without a few bumps in the road.
In 1990, Oracle laid off 10% (about 400 people) of its work force because of accounting errors. This came about because of Oracle’s “up-front” marketing strategy, in which sales people urged potential customers to buy the largest possible amount of software all at once. The sales people then booked the value of future license sales in the current quarter, thereby increasing their bonuses. This became a problem when the future sales failed to materialize. Oracle eventually had to restate its earnings twice, and also settled class-action lawsuits arising from overstating its earnings. Ellison stated in 1992 that Oracle had made “an incredible business mistake.”
In 2000, Oracle gained attention after hiring private investigators to dig through the trash of organizations involved in an antitrust trial involving Microsoft. Then Chairman Larry Ellison defended his company’s hiring of an East Coast detective agency to investigate groups that supported rival Microsoft Corporation during its antitrust trial, calling it a “public service.” The investigation reportedly included a $1,200 offer to janitors at the Association for Competitive Technology to look through Microsoft’s trash. Asked how he’d feel if others were looking into Oracle’s business activities, Ellison said: “We will ship our garbage to Redmond, and they can go through it. We believe in full disclosure.”
In 2004, then U.S. Attorney General John Ashcroft sued Oracle Corporation to prevent them from acquiring a multi-billion dollar intelligence contract. After Ashcroft’s resignation from government, he founded a lobbying firm, The Ashcroft Group, which Oracle hired in 2005. With the group’s help, Oracle went on to acquire the contract.
On January 27, 2010, Oracle announced it had completed its acquisition of Sun Microsystems ¬— valued at more than $7 billion — a move that transformed Oracle from solely a software company to a manufacturer of both software and hardware. The acquisition was delayed for several months by the EU Commission, but was ultimately unconditionally approved.
TODAY
The company generated $5.5 billion from operations in 2007, up from $1 billion the prior year. Oracle’s revenue in 2010 was $6.14 billion.
Phil Robertson, Editor
