Oracle Will Keep Shopping, Just Not in the SaaS Aisle

Oracle chief executive Larry Ellison and co-presidents Safra Catz and Charles Phillips just spent 45 minutes telling investors how good they feel about their current strategy. You know: the strategy that just delivered them a blow-out fourth quarter.

And that strategy means more shopping for software companies to gobble up. Big deals will be few and far between now that PeopleSoft, Siebel, Hyperion and BEA are all done. Instead expect more deals like AdminServer, a software maker for the insurance industry Oracle bought in May. Ellison emphasized that the way to beat SAP in applications was in industry specific applications around banking, healthcare, retail, and the like. It's a smart strategy given SAP's current preoccupation with retrofitting its current software for mid-sized businesses-- a project that's getting mixed reviews so far.

Ellison also weighed in on the future of on demand software. He reiterated his view that for all the rhetoric about software-as-a-service being the industry's future, on demand just isn't very profitable. Ellison should know: Oracle has sold on demand software for ten years and has only recently turned a profit on the business. And as the largest shareholder in NetSuite, Ellison's seen the scrappy up-and-comer's challenges to get into the black firsthand. "Salesforce.com doesn't make much money and they've been at it ten years," Ellison said.

That's dimmed his enthusiasm to grow Oracle's on demand business. Ellison loves to tout Oracle's profitability-- a huge driver behind all those acquisitions is on-going maintenance revenue that makes Oracle a cash generating machine. "The last thing we want to do is have a very large business that's not very profitable and drags our margins down," he said on the call.

In other words: Those rumors that come around every few months that Oracle might be buying Salesforce? Doubtful.