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Crystal ball murky on Oracle's co-CEO plan

Published on Saturday, 27 Sep 2014

If Larry Ellison sailed off on his yacht for good tomorrow, who would really run Oracle? The question is on investors' minds after Ellison, 70, promoted both dealmaker and finance guru Safra Catz and sales leader Mark Hurd to the CEO position last week, while taking on the role of executive chairman and chief technology officer himself.

The move appears to be the first stage of Ellison's gradual withdrawal. But what if Ellison disappeared immediately?

Of the 12 Wall Street analysts who replied to an anonymous Reuters poll, five said Catz would likely run the multinational computer technology company, while only one voted for Hurd, 57. Four said both would continue to run the company, one said neither, and one plumped for dark-horse internal candidate Thomas Kurian.

Oracle did not respond to a request for comment.

Votes in favour of Catz, the 52-year-old former Wall Street banker who orchestrates Oracle's multibillion-dollar acquisitions and has been Ellison's de facto deputy for the past few years, stressed her 15 years of experience at the company.

Hurd, who only joined Oracle in 2010 after leaving Hewlett-Packard under the cloud of a business ethics breach, has a larger public presence, but is still seen as a newcomer.

"In a CEO cage match it's pretty even, but I give Safra extra credit for her years of service with the company," said Kim Forrest, analyst at Fort Pitt Capital. "She likely knows the lay of the land better."

Only one analyst believes Hurd was the more likely to lead the company, chiefly because he is the one with experience of being the CEO of a large technology company.

One analyst said neither is likely to be CEO, echoing sentiments that Ellison does not fully back either candidate to solely run the company he co-founded 37 years ago and built into a US$40 billion-a-year giant.

"It is pretty clear that part of the board does not fully trust Mark Hurd and part of the board does not think she [Catz] has the technology depth," said Jeffrey Sonnenfeld, professor at the Yale School of Management, who was not part of the poll.

Most analysts think the co-CEO arrangement should work in the short term, but questions remain over how long it will last.

"I don't know the timing - it could be three, it could be five years - there may be one [CEO] down the road," said Gartner analyst Chad Eschinger, who would not be drawn to speculate on who that might be.

One figure not mentioned in last week's reshuffle was 47-year-old Kurian, Oracle's executive vice-president in charge of product development, who reports directly to Ellison and has been seen as a rising power in the company.

"Perhaps he did not feel comfortable in the role as a front man, although he does do a solid job in his presentations," said Bill Kreher, a senior analyst at Edward Jones. "He's a few years younger [than Catz and Hurd], so perhaps his time will come."