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Larry Ellison: What Happened, Larry?

In Business This Week: HEADLINER


Has Oracle Chairman Lawrence Ellison taken his eye off the ball? While Ellison is promoting his vision of a network PC on every desk, Oracle's core software business is hitting a rough patch. Second-quarter earnings of $187 million on revenues of $1.6 billion, announced on Dec. 9, missed analysts' estimates by 17%. Worse, Oracle eked out revenue growth of 3% in its database business and 7% in corporate applications--which grew by 96% a quarter earlier. Oracle stock fell 29% on the news, to 22 15/16.

Other factors in Oracle's performance include a shortfall in Asian sales, analysts say. Also, Oracle suffered from a difficult sales-force reorganization and a decline in sales to telecommunications companies, a key market.

It's no wonder Chief Financial Officer Jeffrey Henley sounds embarrassed. "Usually, our forecasts are reasonably close," he says. "But this time, every geography in the world missed their numbers." Could be time for Ellison, now $2.14 billion poorer on paper, to pay attention to the database business that made him a billionaire.EDITED BY KELLEY HOLLAND By Steve HammReturn to top


DON'T LOOK FOR MERRILL LYNCH to walk down the aisle anytime soon with high-tech investment bank Hambrecht & Quist. After some six weeks of takeover talks, sources say the two have reached an impasse over how they would integrate the firms' diverse cultures. Moreover, with Hambrecht's stock soaring on reports of the negotiations, Merrill would have had to pay more than $1 billion for the alliance. That's a hefty premium even by current standards. Although sources say it's unlikely that Hambrecht will look for another merger partner in the near term, the firm is under pressure from Wall Street to bulk up so that it can compete better with its traditional rivals, Alex. Brown, Robertson Stephens, and Montgomery Securities--all of which have been swallowed up by bigger banks.EDITED BY KELLEY HOLLANDReturn to top


IT'S RESTRUCTURING TIME for the international food business at Philip Morris. The company announced on Dec. 9 it would close facilities overseas and slice 2,500 jobs, mostly at Kraft, for annual savings of about $200 million by 2000. Cost: a pretax charge of $630 million. Analysts expect most of the cuts to be made in Europe, where Kraft has an ill-fitting array of food outfits. Philip Morris has overhauled its domestic food operations, and Salomon Smith Barney's Martin Feldman says operating margins for U.S. food companies have climbed from 12% to 18% in the U.S. since 1992. Kraft's margins in Europe are stuck around 12%.EDITED BY KELLEY HOLLANDReturn to top


DOW JONES CHIEF EXECUTIVE PETER KANN agreed on Dec. 9 to merge the company's TV ventures into CNBC. Dow Jones says that it has lost more than $150 million on TV since 1994. CNBC, a cable network owned by NBC, will make about $120 million in the U.S. this year, although its international operations are still in the red. CNBC will now carry plenty of branded Wall Street Journal content, and MSNBC Online also gains access to Journal information. Dow Jones will own half of the merged international operations, while CNBC in the U.S. will remain part of NBC. Says NBC Cable President Tom Rogers: "This creates the ultimate business news brand."EDITED BY KELLEY HOLLANDReturn to top

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