Oracle CEO Larry Ellison steps down as CEO, Catz, Hurd named co-CEOs

Ellison will become CTO and executive chairman of Oracle

It's the end of an era at Oracle, as CEO Larry Ellison has been appointed executive chairman and CTO of the vendor, with co-presidents Safra Catz and Mark Hurd named co-CEOs.

"Safra and Mark will now report to the Oracle Board rather than to me," Ellison said in a statement Thursday. "All the other reporting relationships will remain unchanged. The three of us have been working well together for the last several years, and we plan to continue working together for the foreseeable future. Keeping this management team in place has always been a top priority of mine."

Oracle's announcement came without warning as it also released first-quarter earnings results.

Catz will remain in charge of manufacturing, finance and legal operations, while Hurd continues handling sales, service and global business units, according to a statement.

All software and hardware engineering will remain under the oversight of Ellison.

Ellison declined to go much further than that during a conference call Thursday.

"Mark and Safra have done a spectacular job and deserve the recognition of their new titles," he said. "I'm going to continue doing what I've been doing over the last several years, they're going to continue doing what they're doing over the last several years."

Hurd also weighed in briefly on how he plans to conduct his new role. "I want to stay closer to the action, not get farther away from the action," he said.

The news didn't seem to worry Oracle investors much, at least for now. Its share price rose $0.41 to $41.55 in after-hours trading.

Thursday's stunning announcement came not long after Ellison's 70th birthday and shortly before the company's annual OpenWorld event, where Ellison is expected to play a major role. While the industry has long speculated about whether Ellison would ever retire from Oracle, until now he has kept his plans closely held.

Ellison's many outside interests, such as his purchase of the Hawaiian island Lanai, his many palatial homes and his victorious America's Cup sailing team, had only served to ramp up speculation about his future with Oracle.

At the same time, Ellison is known for keeping close tabs on Oracle's product development, something he'll apparently continue to do as CTO.

Ellison "guided Oracle through some remarkably choppy technological and economic rough waters, and has done so with remarkable success and continuity. He is quite a character, but he is also an extremely bright and innovative businessman," said Charles King, head of Pund-IT in response to the news that Ellison is stepping aside as CEO.

There's reason for the industry to take pause and not overreact to Oracle's announcement, according to one observer.

"Let's talk about what Ellison is not doing," said analyst Frank Scavo, managing partner of IT consulting firm Strativa. "He's not resigning. He's not leaving Oracle. He's not stepping away from day-to-day involvement in Oracle's operations. As the CTO heading up all engineering and product development, he will still be working closely with Catz and Hurd. So, the way I read the news, I don't see any practical change resulting from Ellison's giving up the CEO role."

"You know what a real Ellison exit from Oracle would look like? Steve Ballmer's exit from Microsoft," Scavo added.

The new arrangement really isn't new at all, merely "reflecting reality," said analyst Holger Mueller, vice president and principal analyst of Constellation Research.

"As long as Hurd isn't in charge of product -- see what happened at HP -- everything will be fine," Mueller added, referring to Hurd's run as CEO of Hewlett-Packard.

News of Ellison's shifting role at the company came as it reported a slight revenue increase and flat income.

Total revenue rose 3 percent to US$8.6 billion for the first quarter ended Aug. 31, while net income was flat at $2.2 billion.

SaaS (software as a service) and (platform as a service) revenue rose 32 percent to $337 million, while hardware systems revenue fell 8 percent to $1.2 billion. Both are key areas for Oracle, which derives the bulk of its sales from on-premises software and annual maintenance fees.

"Our cloud business is already three times the size of Workday, but we won't be satisfied until we're number one in the cloud," Hurd said in a statement.

OpenWorld will feature the rollout of Oracle's long-anticipated database cloud service, Ellison said in a statement. With the service, "our customers and ISV's can move any of their existing Oracle databases and applications to the Oracle Cloud with the push of a button."

Oracle's database is its largest on-premises software business and will be its biggest cloud services business over time, Ellison predicted on the conference call.

The database service will be sold alongside Oracle's PaaS (platform-as-a-service) and IaaS (infrastructure-as-a-service) offerings. Those, coupled with Oracle's wide array of applications, represent a chance for Oracle to become "the leader in the next generation of computing," Ellison said.

"We're going to be doing more for our customers than we did before," he said. "Before, we sold them software and they would have to provide their own data center, their own labor, their own network and all of that. This is our chance to get bigger. To become more important."

Expect plenty of similar rhetoric -- along with speculation about Ellison's future -- during OpenWorld, which kicks off Sept. 28 in San Francisco.

(Joab Jackson in New York contributed to this report.)

Copyright © 2014 IDG Communications, Inc.

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