Cited: Reuters

An optimistic Oracle Corp Chief Executive Larry Ellison said on February 20 he expected Sun Microsystems to be making a profit soon. The unprofitable hardware maker, Sun Microsystems, was purchased last month for $7.5 billion by Oracle Corp.

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Oracle executives have previously declined to say how long it would take for Sun to start turning a profit, although they have promised it would add $1.5 billion to operating profit within a year. The company had posted losses of more than $2 billion in the two years prior to its sale.

But Ellison, asked by reporters how the Sun integration was going on the sidelines of a news conference on Saturday in San Francisco, said: “I think it’s going really well and we expect to be profitable right away.”

Some analysts are skeptical that Ellison will be able to quickly turn around Sun, which never fully recovered from the bursting of the dot-com bubble in the early 2000s that savaged demand for its high-end computers.

He made the comments in his hometown after returning from Valencia, Spain, to show off the trophy he won for defeating rival billionaire Ernesto Bertarelli in the America’s Cup sailing race.

Ellison vowed to defend his title. But the 65-year-old, who founded Oracle more than 30 years ago, also said he has no intention of retiring from his position at the helm of Oracle to focus on sailing.

“I love Oracle and I love sailing, and I think I can do both,” he said, after accepting a key to the city from San Francisco Mayor Gavin Newsom, who, like Ellison, wants to see the next America’s Cup race held in San Francisco Bay.

“It certainly makes commuting easier,” joked Ellison, whose Redwood City-based company is about 25 miles (40km) south of San Francisco.

Oracle Corporation (Oracle), incorporated in 2005, is an enterprise software company. The Company develops, manufactures, markets, distributes and services database and middleware software, as well as applications software that help its customers manage their businesses. Oracle is organized into two businesses: software and services. These businesses are further divided into five operating segments. Its software business consists of two operating segments, new software licenses, and software license updates and product support. Its services business consists of three operating segments, consulting, On Demand and education. The Company’s software and services businesses represented 81% and 19% of its total revenues, during the fiscal year ended May 31, 2009 (fiscal 2009). In July 2009, the Company completed the acquisition of Relsys International, Inc. In January 2010, the Company announced that it has acquired Silver Creek Systems, Inc. (Silver Creek), a provider of product data quality solutions. In January 2010, the Company acquired Sun Microsystems, Inc.

Sun has a tremendous technological legacy. Some claim to be “the dot in dot-com” in many of its marketing campaigns and it wasn’t hyperbole. Before anybody contemplated the possibility of network computers, the company was pushing the idea of network computers. It built the servers and storage to make it happen. It created Java, which allowed developers to write large programs for businesses that could run across different platforms. Now, after 28 years, Sun becomes Oracle.

Ellison has confidently predicted that the money-losing computer server business will soon turn a profit, shaking off numerous critics who say he should not have expanded into hardware.

The goal is to invest in new products and incorporate Sun’s high-end systems into a premium all-in-one computer system. It has begun to sell directly to Sun’s top 4,000 customers while increasing its research and development efforts.

Aggressive Oracle has been built on acquisitions, including more than 60 companies purchased in the last five years.

Shares of Oracle have been flat this year following last year’s 39% rise. Earnings in its most recent quarter were up 13% and ahead of forecasts as companies became less reluctant to spend money on technology.

Oracle has more than 40% of the database market, far ahead of IBM and Microsoft. It sells a wide range of enterprise solutions, including middleware and applications, as it aims to be a one-stop destination for any company looking for enterprise software. Software license updates and product support provide nearly half of the revenues of the company.

The consensus analyst recommendation on Oracle is “buy,” according to Thomson Reuters, consisting of nine “strong buys,” 16 “buys” and eight “holds.”

This profitable California-based company is in strong financial shape with plenty of cash to cover its debt. Ellison, who co-founded it in 1977, owns nearly one-fourth of the company. Oracle does, however, face fierce competition and there’s also the possibility that smaller competitors might pop up with something new that could affect its business. The results of buying Sun still remain to be seen.

For fiscal year ending in May, earnings are expected to increase by 10% and in the following fiscal year expected to increase 18%. Predictions from the application software industry expect a 13% increase in annualized growth rate; however, the growth rate forecast for the company is 14%.

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My Take: Wow, I thought Microsoft had the highest percentage in the industry. Anyway, I own some of Sun Microsystems programs and they are pretty good. I do not think I own any of their hardware though. Then again, I could be wrong. I wish I had stuck with my computer programming education. But, when I became disabled I was devastated and didn’t even think of anything. I regret that.

The money I could be making, even from home, doing data recovery or writing network security software makes my head hurt. There are so many people who need disk recovery or businesses that need intrusion prevention that a person could easily make enough to live more than comfortably. At least I have the right idea to begin with, computers.

I might even have been able to expand into PSP repair to make even more money. Think about the number of game systems are nowadays, you’d understand what I mean. I might even have been able to fix GPS systems, who knows. Well, they say hindsight is 20/20!

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