Oracle’s economic cushion

December 20, 2007, 4:14 AM UTC

Let us all praise Larry Ellison. Everyone pays attention to the Oracle (ORCL) CEO because he’s a wonderful showman, a free-spending yachtsman, a home builder, a seeker of the fountain of youth, a bon vivant and a delightful conversationalist.

That long list makes it easy to forget the guy also is an astute businessman. It was Ellison, after all, who accurately predicted that enterprise software had become a mature industry, which is why his company embarked on an acquisitions binge that included PeopleSoft, Siebel, Hyperion and many smaller software companies. The results of the shopping expedition were evident on Wednesday, when Oracle reported earnings for the quarter that ended in November. Year-over year revenues grew 31%, correcting for currency effects. Earnings grew 24%. Most impressively, Oracle’s operating margins (non-GAAP) are 41%; Ellison wants them to be 50%.

For years Oracle was the king of databases but a peasant in software applications, things like accounting programs or HR-management tools that work with a database. Now that the company has bought many of the best applications makers, it’s got that base covered, too. Oracle executives say they’re able to “pull through” sales of so many additional applications because its existing database customers are willing to consider Oracle’s improved menu.

The upshot is that in a time of economic uncertainty Oracle has become a broad-based machine that can take the macroeconomic blows as well as, or better than, anyone. In Wednesday’s post-market conference call with investors, neither Ellison nor his two presidents – finance chief Safra Catz and sales honcho Charles Phillips – did anything to dissuade investors that economic times are tough. Instead they crowed about their product line and geographic diversity. Ellison noted that while customers can ponder an implementation of database and other bulky enterprise software for years, certain applications are far more urgent, especially programs that help industrial and financial companies comply with regulatory requirements. “It’s a more resilient strategy during a downturn,” he said.

In his youth, Ellison seemed to relish his bad-boy image. He’s more mature now too, and he sure seems to be enjoying the role of an industry titan at the helm of a really big ship in turbulent waters.