Oracle To Cut Costs by $1 Billion

Oracle’s Chief Executive Larry Ellison said last week that the company would cut its expenses by $1 billion (US$) over the next 18 months — by increasing the sale of its software over the Internet.

“We’re going to increase development spending very substantially while taking $1 billion out of the company because we’re becoming the ultimate e-business,” Ellison said at a press conference at Oracle’s headquarters.

Some analysts say this is a recurrent theme Ellison has been pushing lately to shore up support for the company before its less than dazzling quarterly report is released the week of June 14. But, they say, it’s also part of Ellison’s strategy to gain ground on its recently declared No. 1 rival, IBM.

To back its plans, Oracle is prepared to triple its advertising budget to $150 million — putting the Redwood City, California software giant on par with Big Blue’s already massive advertising campaign. In fact, Oracle fired its last ad agency and is now in the final stages of choosing a new one.

Meanwhile at last week’s news conference, several of Oracle’s top executives preached the gospel of Internet and e-commerce like true high-tech evangelists.

“Companies have a choice: they can either become an e-business or go out of business,” said Mark Jarvis, head of worldwide marketing for Oracle.

But it was Ellison’s own personal testimony that summed up Oracle’s recent past.

“We probably haven’t been managing our business as well as we could have,” Ellison said.

Industry experts say such straight talk from Oracle’s CEO is a giant step in the right direction — but much concrete work must still be done. Despite the challenges, they point out that Oracle has much going in its favor. Its software is already the driving force behind much of today’s e-commerce. Nine of the top 10 business-to-businesses e-commerce giants, such as networking giant Cisco Systems Inc., use Oracle’s products.

Now it’s just a matter of whether or not Ellison’s e-commerce conversion will stand the test of time.

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