Cloud computing has little attraction for Oracle

Oracle sees little chance of generating substantial revenue from cloud computing, CEO Larry Ellison said last week.


Oracle sees little chance of generating substantial revenue from cloud computing, CEO Larry Ellison said last week.

Echoing comments he made at a recent analyst event, Ellison disdained the concept as a fad . "I think it's ludicrous that cloud computing is going to take over the world. ... But they (industry observers) get very excited about it, and it's this big echo chamber," he said.

It is too difficult to make money selling cloud computing services, which is why Oracle decided to use Amazon's Simple Storage Service for Oracle's recently announced database backup offering, Ellison said.

The Oracle CEO projected an aura of confidence despite the turmoil on financial markets.

The weak economy could actually help Oracle grow, since acquisitions -- of which the company has made many in recent years -- could be cheaper, Ellison said.

He also spun Oracle's fallen stock price as a positive. "We don't like our stock being down, but we're buyers of our stock at these prices. We'll look at that as an opportunity."

Ellison also downplayed the importance of new license growth, which is often cited as a key indicator of a software company's financial health.

A substantial portion of Oracle's revenue -- roughly half at this point -- comes from existing customers renewing their annual license agreements, and the percentage continues to grow, according to Ellison.

"We think the most important part of our business, the most profitable part of our business, is that installed base that renews every year," he said. "It is extremely profitable and the profit engine of this company. .... That's the number everyone should be looking at."

While Ellison listed reasons for optimisim, part of the meeting focussed on the compensation packages granted to Ellison and other top Oracle executives. Including incentives and stock options, Ellison made more than $83 million (£48 million) in the 2008 financial year, according to an estimate by the consulting firm Proxy Governance.

Shareholders voted down a proposal submitted by a Catholic religious order and company shareholder, that would have granted shareholders the right to make a non-binding, "advisory" vote on ratifying executives' pay.

During a question and answer session, Jeffrey Berg, chairman of Oracle's compensation committee, said that in his opinion, the company "has an extremely reasonable deal with Larry."

Ellison is a huge contributor to Oracle's growth, having been the chief architect of its aggressive acquisition strategy, Berg said.

The pay of tech company executives has come under increased scrutiny from shareholders this year as the economy weakened.

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