Ellison holds forth on grid and rivals

Oracle founder Larry Ellison has reiterated his grid computing mantra and his take on Oracle's acquisition path during the company's annual analyst day Wednesday.

Despite a recent setback in sales in the software sector, Ellison and several other Oracle executives said they were optimistic about the company's growth. In the past few weeks, a number of enterprise software companies, from PeopleSoft to Siebel Systems, have recently issued quarterly warnings that sales were slow.

Ellison's mantra of grid computing was again raised during the analyst event. He noted how computers clustered together can provide faster processing power than mainframes and that the future will involve two or four-processor machines hooked together in a grid.

"We have a very different view of the world. Microsoft tries to make their software work better with mainframes, while we try to make them work better on grids," Ellison said.

He said the company is considering a number of pricing models, beyond basing it on the number of processors a customer uses. One such model may be based on a per employee basis, he said.

And the issue of acquisitions frequently came up during his presentation, as analysts asked him about the status of the PeopleSoft hostile bid as well as other deals Oracle may consider.

"Being in Silicon Valley, we will have the opportunity to buy a lot of companies, some of which are in Silicon Valley and run by former Oracle people," said Ellison.

During the Justice Department's trial to block Oracle's acquisition of PeopleSoft, Oracle submitted a list of potential acquisition targets it was considering in April last year. Among those companies run by former Oracle executives that was on Oracle's list included Siebel Systems and business objects.

Ellison noted he is interested in bolstering the company's middleware offerings, and less so in the database market, given the company's lead there.

Ellison was also asked by analysts what he will do if Microsoft makes another play to acquire competitor SAP, or if IBM looks at snapping up the European business software applications giant.

"IBM has to be Switzerland as far as applications are concerned," Ellison said, noting that Microsoft could make another run for SAP too. "It would use up all their cash, so maybe they'd have to go a month without free soft drinks."

Oracle, for the moment, is not entertaining ideas of making two acquisitions at once, Ellison said. He noted that although he believes his management team is up to handling the task, he would be concerned Wall Street would sell off Oracle's stock if it were to engage in two transactions at once.

"I think we could handle it. But I am concerned that people would discount the stock, and that price to pay would be too high. We'll have to prove that we can do acquisitions that are accretive and once we do, then maybe we can do two at a time," Ellison said. "But saying that, I can't say no other opportunities may show up."

Dawn Kawamoto writes for News.com