Larry Ellison explains Oracle's restructuring and layoffs: Some of our business units are 'melting away' and 'we just don't care' (ORCL)
- Oracle has been conducting rolling layoffs worldwide since March, impacting all sorts of units, including its all-important cloud divisions.
- On Wednesday, Oracle founder, chairman and CTO Larry Ellison gave some insight into what's going on.
- Some business units are not doing well and Oracle is content to let them whither, he explained.
- Other units are growing fast and they are the company's future.
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Oracle has been conducting rolling layoffs worldwide since March, impacting all sorts of business units within the company, including its all-important cloud divisions. While the company has publicly acknowledged the layoffs, management hasn't discussed details like how many jobs will be cut or when the restructuring will end.
Oracle may not have an end date in mind at all. The company has engaged in ongoing layoffs since at least 2013.
Still, on Wednesday, after Oracle reported its fiscal 2019 Q4 earnings, founder, chairman and CTO Larry Ellison gave some insight into what's going on, saying that some of Oracle's businesses "are melting away and we just don't care. We are focused on our star products and our star products are now driving our top line higher."
He said shrinking businesses included some old-school, on premises software products. That seems obvious as Oracle is now pushing its customers to buy the cloud versions of many of its products.
He also cited Oracle's ever-shrinking hardware business, the result of its $7.2 billion acquisition of Sun back in 2010. Oracle's hardware business has been declining almost since Oracle closed the deal, and some of the hardware businesses shrunk another 25% in the latest quarter, one of Oracle's co-CEOs, Mark Hurd, said on Wednesday during that same analysts call. Hardware declined 11% overall in the quarter.
Oracle has been laying off people from that unit for years. In 2017, it reportedly laid off about 2,500 employees from the old Sun business, ZDNet reported.
But Ellison also threw Oracle's Data Cloud business into the "shrinking, we-don't-care" bucket blaming the unit's problems on "all the privacy issues," he said.
Data Cloud was formed through a series of acquisitions of online advertising data companies like BlueKai, Datalogix, and Moat. Oracle spent about $3 billion on six key acquisitions for the unit, Ad Exchanger reports
By 2017, Oracle was considered one of the power players in the data broker industry, gathering data on consumers and watching their online activity to help brands target digital ads.
Then came the Cambridge Analytica scandal and Europe's GDPR privacy law. Oracle shut down one of its ad tracking products in Europe in March, Ad Exchanger reported.
Ellison explained this week that the growth from several of Oracle's successful products was starting to outpace shrinkage from the who-cares declining units. These outperformers, he said, includes Oracle's own home-grown cloud applications and NetSuite, the cloud software company Oracle bought for $9.3 billion in 2016. (Ellison owned 40% of NetSuite when Oracle bought it, upsetting some Oracle shareholders with the price paid.)
So, while he admitted that Oracle's overall growth has been modest — annual revenues increased 2% — "underneath that, there's really a lot of activity, you have these very, these modern businesses like the autonomous database, Fusion, NetSuite growing very rapidly, taking share," he said.
"So yeah, there are some of our businesses that are not, if you will, hot. But the good news is, the hot businesses are now bigger than the not-so-hot businesses, and that's determining our future," he said.
Despite the layoffs, Oracle says it is hiring globally. A spokesperson tells Business Insider, "Every year Oracle hires tens of thousands of employees and we are currently hiring globally and in every line of business, including OCI Gen2. Enabling our customers' success has always been a top priority for Oracle. We are laser-focused on delivering the best cloud products that drive efficiencies, fuel innovation and impact the bottom line for our customers around the world."