Oracle's Ellison steps aside, makes way for co-CEOs

Larry Ellison has built Oracle into one of Silicon Valley's most successful technology companies.

Reuters/San Francisco/Seattle

Larry Ellison, co-founder and leader of Oracle Corp for 37 years, stepped aside as chief executive officer on Thursday, to be replaced by co-CEOs Safra Catz and Mark Hurd, raising questions about a job-sharing arrangement that has had a fraught record elsewhere.

Ellison and the two new co-CEOs each stressed that nothing would change under the new management structure, with Ellison staying on as executive chairman and chief technology officer.

But Oracle shares fell 2% to $40.70 in after-hours trading after it reported the management shake-up and that profit had fallen below Wall Street's average forecast, hurt by weak hardware sales.

The move immediately attracted criticism from management experts.

"In almost all cases, these co-CEO configurations are a jerry-rigged solution to a political problem," said Jeffrey Sonnenfeld, a professor at Yale School of Management.

The move comes earlier than expected by many investors, and appears designed to address concerns about the company's direction under Ellison, 70, who co-founded the database company that became Oracle in 1977 and has been Oracle's only CEO.

"While there was some speculation Larry could step down, the timing is a bit of a head scratcher and the Street will have many questions," said Daniel Ives, an analyst at FBR Capital Markets. "Investors have a mixed view of Safra and especially Hurd as co-CEOs given the missteps we have seen from the company over the past few years."

On a conference call with analysts, Ellison said: "I'm going to continue doing what I've been doing over the last several years. They're going to continue what they've been doing over the last several years," referring to Hurd, 57, and Catz, 52. "Mark and Safra have done a spectacular job and I think they deserve the recognition of their new titles."

Catz and Hurd echoed that mantra on the call.

"I want to make sure we are very, very clear. There will actually be no changes," said Catz. "No changes whatsoever."

For his part, Hurd stressed that Oracle was not hierarchical. "We're pretty flat in terms of the way we run the place, and we want to keep it that way," he told the conference call.

The creation of two CEO roles, which has largely been unsuccessful when tried at other companies, raises questions of how Catz and Hurd, both strong personalities, will work together at the top.

Raised in a rough Chicago neighbourhood, Ellison built Oracle into one of Silicon Valley's most successful technology companies, whose databases have become the technology backbones of the world's largest corps.

Ellison took the company public in 1986, the same year as Microsoft, with revenue of $55mn. This fiscal year revenues are expected to top $40bn.