Oracle Co-CEO to Go on Medical Leave -- WSJ

Date : 09/12/2019 @ 8:02AM
Source : Dow Jones News
Stock : Oracle Corp (ORCL)
Quote : 53.47  0.1 (0.19%) @ 10:07PM

Oracle Co-CEO to Go on Medical Leave -- WSJ

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Mark Hurd's absence comes as the tech giant releases results and buyback plan

By Sarah E. Needleman 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 12, 2019).

Oracle Corp. said one of its two chief executives, Mark Hurd, will take a medical leave of absence, removing the technology giant's top executive for sales and strategy at a time of intensifying competition in the business-software market.

Mr. Hurd said in a note to employees Wednesday that he requested the leave to address health issues. Oracle didn't mention the specific issues the CEO is facing, and company representatives didn't respond to requests for further comment.

The absence means Safra Catz will be Oracle's sole CEO. Since September 2014 Oracle has had an unusual leadership structure in which Mr. Hurd and Ms. Catz share the CEO title, while Oracle co-founder Larry Ellison is chairman and technology chief.

Ms. Catz said Mr. Hurd was "extremely engaged" with the business through the company's fiscal first quarter, which ended Aug. 31, but added that "now Mark needs to focus on his health." Ms. Catz and Mr. Ellison will manage Mr. Hurd's responsibilities in the interim, according to Oracle.

Some members of the investment community have known for months Mr. Hurd has had health issues, two analysts told The Wall Street Journal. Mr. Hurd was among Oracle executives slated to speak at the company's OpenWorld industry event next week in San Francisco.

The news about Mr. Hurd's leave came as Oracle released its first-quarter financial report a day earlier than anticipated and revealed plans to buy back an additional $15 billion in stock. "We felt it made sense to share all of our news at once," Ms. Catz said.

Shares in Oracle fell 2.8% in after-hours trading as the company said its profit excluding items was in line with analysts' estimates and sales rose slightly from a year ago.

Oracle, founded more than 40 years ago, has been a pioneer in business database management. It has faced stiff competition from industry stalwarts like Microsoft Corp. in selling software to businesses, as well as younger rivals such as Salesforce.com Inc. and Workday Inc.

The company is the third-largest software-as-a-service vendor by market share, behind Salesforce and the leader Microsoft, according to research firm Gartner Inc. Its growth is also tied closely to the health of enterprise technology spending broadly, according to analysts. World-wide information-technology spending is projected to rise less than 1% this year to $3.74 trillion, slower than the 5.1% growth a year earlier, Gartner said.

And while the first quarter is typically Oracle's slowest for generating revenue as a new sales cycle starts, Wedbush analyst Steve Koenig said the latest results disappointed investors who expected stronger growth after signs earlier this year that the company's database business was improving.

"It probably caused people to wonder, 'When is Oracle going to show the long hoped-for growth?' " he said.

One bright spot in Oracle's results was in its cloud business, said Credit Suisse analyst Brad Zelnick. Revenue from cloud services and license support, the company's largest segment, rose 3% to $6.81 billion. Overall, revenue rose less than 1% to $9.22 billion.

On a conference call, Oracle executives forecast revenue rising in the current quarter between 1% and 3% from a year earlier, compared with the 2.4% growth expected from analysts.

"This is one of a few companies that we expect will accelerate its growth this year," Mr. Zelnick said.

Oracle could also benefit from focusing on a mostly untapped area in cloud-service offerings -- enterprise resource planning -- Mr. Zelnick said, calling it the crown jewels of an organization.

In the latest period, Oracle said its profit fell 6% from a year earlier to $2.13 billion, or 63 cents a share. On an adjusted basis, the company said its profit was 81 cents a share, in line with analysts' estimates, according to FactSet.

Oracle boosting its share buyback program by $15 billion adds to the nearly $50 billion worth of stock repurchased over the past 18 months, but Stifel analyst Brad Reback said he is concerned about the current pace of buybacks being sustainable based on the company's debt load.

On an earnings call, Mr. Ellison name-checked several big customers, saying they chose Oracle over its competitors for cloud services. McDonald's Corp., for instance, is using the company's cloud-based human-capital management technology. "This was a battle between us and Workday," he said. "We won."

Write to Sarah E. Needleman at sarah.needleman@wsj.com

 

(END) Dow Jones Newswires

September 12, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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