Larry Ellison is going for goal.
Oracle's chief executive discussed his game plan to grow the software giant from a nearly $15bn company to a $30bn behemoth over the next few years — and do so at a pace that maintains a 40 percent operating margin.
"In order to grow at this pace, there'll have to be a couple of acquisitions along the way," Ellison said during a press conference Wednesday at Oracle OpenWorld. "The tricky thing is to grow at this rate and maintain a 40 percent operating margin."
The PeopleSoft merger and Oracle's pending acquisition of Siebel mark two recent megamergers that will help Oracle achieve the $30bn goal. And the PeopleSoft acquisition has already demonstrated Oracle can undertake large mergers without giving up its 40 percent margins, Ellison said.
And though Oracle is not ready to take on another multibillion-dollar merger while it digests its Siebel acquisition, Ellison has demonstrated he is willing to do smaller, niche-market deals at the same time.
Ellison and Co. have found the applications market to be lucrative. A third of Oracle's revenues come from applications, but the contribution to profits is in excess of 40 percent, the chief executive said.
"The growth rate is also higher than our database business. It's a sticky business with the licence renewals and is on the high end of our value chain," Ellison said.
Oracle is interested in markets like hosted services and believes its acquisition of Siebel will give it a leg up in the on-demand CRM realm. Siebel's OnDemand business competes with Salesforce.com, a company in which Ellison invests.
"We want to go after Salesforce.com as much as we can," Ellison said. "I'm an investor in Salesforce, and I want to see my investment go to zero."
Business intelligence players and middleware developer BEA, however, are less attractive acquisition targets, Ellison said.
"At one time we highlighted BEA for a possible acquisition, but less so now," Ellison said. "We have passed them up... and they don't really want to be bought."
He added that Oracle, through its presence in the database market, is already a top leader in the business intelligence market, reducing his desire to expand further via acquisitions.
Oracle is also considering de-emphasising some projects of the companies it acquires. Siebel, for example, is working on Project Nexus, its services architecture.
But since Project Nexus is not written in Java, Oracle is not likely to attempt to preserve its code, Ellison said. Oracle is currently undertaking a major effort to integrate PeopleSoft, and later Siebel, software into its open source, standards-based Project Fusion architecture.
"The code is pretty much overrated," Ellison said. "It's more important to know such things as structure, features and functionality."
