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Ellison Keeps Door Open for Oracle Chip Purchase

Oracle CEO Larry Ellison didn't rule out the possibility of buying chip companies but also seemed to dismiss the idea of expanding its services offerings, in remarks made during the vendor's annual shareholder meeting on Wednesday.

Last month at an analyst event, Ellison reportedly indicated Oracle was open to buying chip makers, remarks that stirred up speculation the company would buy AMD.

Oracle may be more interested in acquiring innovative chip technology versus grabbing market share with a major purchase, judging from Ellison's statements Wednesday.

"My point really was that we are interested in buying IP of all kinds," he said. "So, insofar as a semiconductor represents IP ... we would be interested in certain kinds of semiconductor companies."

For example, although Oracle designs the SPARC chips it gained by purchasing Sun Microsystems, they are fabricated elsewhere, he said.

"We are an IP creator and IP buyer, as opposed to trying to expand our business by buying a lot of services companies," he added, a remark that stands in contrast to some speculation Oracle may do the latter.

Oracle co-president Mark Hurd also weighed in on the services topic.

"I'm a big believer that the services world is changing dramatically," said Hurd, the former CEO of Oracle rival Hewlett-Packard, which has a large services division.

The "very labor-based" services market is involved with "cooking together" hardware and software for customers but the integrated systems Oracle is now pushing "actually puts that transformation into a box," Hurd said. "That has a chance for us to turn some of that services market today into a technology market that we can interrupt."

Oracle says it is having smashing success with one such integrated offering, the Exadata data-processing machine. The Exadata sales "pipeline," or list of prospective sales, stands at US$1.5 billion in the company's current fiscal year, according to Ellison.

Competitors are responding to Exadata with moves like IBM's recent purchase of Netezza, maker of another high-performance database appliance, Ellison said.

During a question-and-answer session, one shareholder brought up a particularly competitive relationship: Ellison's rivalry with CRM (customer relationship management) software vendor Salesforce.com CEO Marc Benioff, with whom he has long exchanged public barbs.

Ellison came up with a few more wisecracks on Wednesday.

When Salesforce.com was first formed, the company defined itself as SaaS (software as a service), but then Amazon launched its Elastic Compute Cloud (EC2) service, Ellison said.

"Salesforce.com said 'Whoa. That's way cooler than SaaS! Cloud! Yeah, yeah! We're cloud!' So within 40 seconds they went from SaaS to true cloud computing," Ellison said.

Ellison expounded at length on Oracle's own definition of cloud computing at the recent OpenWorld conference, but said the shareholder meeting was probably not the best venue for another such discussion.

The shareholder suggested Ellison and Benioff, a former Oracle employee, should get together for coffee and hash out their differences.

"We shouldn't drink coffee if we get together," Ellison said jokingly. His jabs at Benioff are "not personal," he added. "It's just business. ... We compete with Salesforce.com. They're our largest competitor in that application area. Our job is to beat them."

Another shareholder cited Oracle's lawsuit against Google around alleged Java patent violations in the Android OS. Ellison made no new remarks, but briefly summarized Oracle's position and said, "we are seeking redress and compensation in court."

In other business at the meeting, a shareholder proposal calling for the creation of a board-level committee on sustainability was defeated.

The proposal was submitted by John Harrington, president and CEO of Harrington Investments, which pushes socially responsible investing. The firm has made similar requests to other tech companies, achieving some success.

Oracle's board had opposed the measure on grounds that the company's current efforts, which include an environmental steering committee, are enough.

"I think I understand the people who feel very strongly about the environment," Ellison said after the vote. "More and more people on the earth making serious demands on the limited resources of our planet. ... We certainly believe in sustainability." The only disagreement is the proper mechanism to achieve it, he added.

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