Ellison Steps Down as CEO of Oracle
Oracle Corporation (NYSE: ORCL) is a Redwood City, California based multinational computer technology company that specializes in developing and marketing computer hardware systems and venture software products. Last week, Oracle founder and Chief Executive Larry Ellison stepped down as CEO after 37 years. He will be replaced by current co-presidents Mark Hurd and Safra Catz, who will serve as co-CEOs.
Investors and financial analysts alike are skeptical of the decision for joint leadership at Oracle, mostly because many other companies have not fared so well with the same set up in the past. According to Lindred Greer, an assistant professor of organizational behavior at Stanford Graduate School of Business, dual leadership roles “causes conflict,” results in “negative performance by teams,” and gives the two leaders “hostile mindsets.” Ellison will take over as executive chairman and chief technology officer to help transition Hurd and Catz into their respective CEO roles.
Shares of Oracle opened at $40.58 on Friday, September 19th. The tech company has a 1-year high of $43.19 and a 1-year low of $32.00. The stock’s daily moving average is $39.98 and has a 50-day moving average of $40.83. The market cap for Oracle is $177.15 billion and its P/E ratio is 16.64.
On September 19th, UBS analyst Brent Thill recommended a Buy rating for Oracle, despite his skepticism on the new co-CEO structure. He noted, “It’s going to be a sticky transition… They were on a paved highway, they went off the highway onto a gravel road, and now they’re trying to find their way to the new road.” Thill currently has a 68% success rate in recommending stocks, earning him a +13.2% average return per recommendation. He has also rated Oracle 13 times, earning an 85% success rate recommending the stock.
On the other hand, on September 19th Credit Agricole analyst Ed Maguire reiterated an Underperform rating for the stock. He reasoned, “We view Larry Ellison’s transfer of the CEO title to Mark Hurd and Safra Catz as a change in title, not any change in role. SAP’s $8.3bn acquisition of Concur underscores the consolidation imperative for big software as Oracle absorbs Micros. F1Q results reinforce our view that secular headwinds and the transition to a cloud business model will continue to contain near-term upside in the shares.” Maquire currently has a 63% success rate in recommending stocks, earning him a +4.7% average return per recommendation. He has also rated Oracle 10 times, earning a 30% success rate.
On average, the top analyst consensus for Oracle is Moderate Buy.