Photo Credit: Eduardo Ripoll/33rd Americas Cup
After spending on sailing and deals, Larry Ellison is on a roll
Commentary: Tenacity, patience and hefty investments paying off
By Therese Poletti, MarketWatch
SAN FRANCISCO (MarketWatch) -- So far, it looks like this is Larry Ellison's year.
The hefty investments made in recent years by the billionaire chief executive of Oracle Corp. (NASDAQ:ORCL) in both business and sailing are paying off.
On Valentine's Day, Ellison's high-tech trimaran and his BMW Oracle Racing team won the America's Cup, sailing's oldest trophy, the first American team to win since 1992.
Winning the coveted sterling silver cup had become a singular quest for the competitive Ellison, right up there with leading the consolidation in the software industry.
Both topics were clearly near and dear to the usually cool Ellison as he showed a rare burst of emotion at a press conference over the weekend, wearing his racing jacket and cap. He told reporters that when he realized he was sailing for the United States, and not just his team BMW Oracle, "I got chills," adding that it was "very primally moving."
He had just jubilantly accepted the key to the city from San Francisco Mayor Gavin Newsom, standing on red-carpeted steps of the opulent rotunda in City Hall, with two white-gloved men on either side, guarding the America's Cup.
The city is pulling out all the stops to try and win favor as the host city for the next America's Cup, which has never taken place in San Francisco.
Ellison has been seeking this victory since founding team BMW Oracle 10 years ago. Since then, he has also been in a seething rivalry with Swiss Italian pharmaceutical heir, Ernesto Bertarelli, who founded the racing syndicate Alinghi, the winner of the America's Cup in 2007. Ellison eventually hired away Bertarelli's captain, Russell Coutts of New Zealand, who now has skippered four America's Cup victories.
Ellison, CEO of one of the world's largest business software companies, was asked about the impact technology had on winning the race. His winning boat, USA, is a technological marvel, but Ellison has not disclosed how many millions he spent to build the massive trimaran. It has been estimated that he spent $200 million on the 2007 regatta.
Ellison's boat can sail with a traditional mast and soft sails. But it also has a massive wing sail which towers a breath-taking 20 stories, or 223 feet, above the deck, made of carbon fiber. Precise control is the main advantage of the wing sail -- two times the size of wing on a Boeing 747 -- versus a conventional sail. The boat is outfitted with 250 sensors, feeding performance and wind speed data into, what else, a central database collecting all this data.
"We had a really fast boat," Ellison said. "It was an enormous advantage," he said, adding, though, that the technology by no means guaranteed anything, and that the win was a combination of technology and human toil. He gave kudos to the crew who sailed the race in Valencia, Spain, skippered by Coutts. "But in the end, the guys on the water have to sail it and they did an absolute brilliant job of sailing the boat."
For the next couple of months, Ellison is going to be the toast of a few cities competing to host the race. As a member of the Golden Gate Yacht Club in San Francisco, the club now becomes the defender of the cup. Ellison, who also has a home here, expressed a personal preference for the America's Cup to be held next in San Francisco, adding that such an event could bring about $1 billion in revenue to the city, but that infrastructure would have to be put into place to support an almost mini Olympic village.
The America's Cup first began in 1851, and was won by a team from the New York Yacht Club. Newport, R.I., where Ellison has reportedly also bought a Gilded Age mansion once owned by the Astors, is vying with San Diego and other venues. Both Newport and San Diego have previously hosted the event, while San Francisco has not.
Ellison's victory is the culmination of a dream for a very determined sailor. In business, Ellison exhibits the same relentless drive in his company's pursuit of deals and customers. Recently, Oracle was able to win over the European Commission, which had initially tried to block Oracle's deal to buy Sun Microsystems Inc. See Oracle and Sun news here.
The 65-year-old software tycoon also pledged that Sun will be profitable now that the merger is complete. He reiterated Oracle's plans to invest more money into Sun by hiring 2,000 workers (the company is also cutting 1,000 jobs). "We are hiring," Ellison said on Saturday. "We are bullish on Sun." See Oracle news here.
At a time when many companies are cutting back on their investments, especially in research and development, Ellison's and Oracle's investments are almost an anomaly. In sailing, that investment has paid off. With Oracle's string of mergers, investors have seen the company grow beyond its core database business and they will soon see whether Sun is a boost or a hindrance.
Eventually, there may come a day when no more deals can help fuel Oracle's growth. But for now, you have to grudgingly admire Ellison's tenacity and determination to win
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