Microchip Firms Could Be Good Fit: Oracle

Oracle is keen to make more acquisitions to bolster its technology and a microchip company could be a good fit, said Larry Ellison, CEO, Oracle.

Oracle, whose products companies use to manage databases and automate their businesses, is starting to compete in high-end servers and other hardware following its $7.5 billion acquisition of Sun Microsystems earlier this year.

"Our focus is to build our (intellectual property) portfolio. ... You could see us buying chip companies," said Ellison. "Silicon is very important, software IP is very important."

Oracle reiterated it plans to invest $4 billion on research and development in fiscal 2011 despite the tepid economy.

"We will continue to invest heavily in internal research and development and we'll continue to make small acquisitions and large acquisitions to acquire great products, great R&D," said Jeff Epstein, Chief Financial Officer, Oracle.

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Combining technology acquired through Sun with Oracle's database software, the company released the Exadata X2-8 database appliance and Exalogic, a new product to help companies manage so-called ‘cloud’ computing.

Oracle also released a new suite of applications for managing accounting, human resources, supplies, sales and marketing. Designing hardware and software to work together instead of mixing and matching products made by different companies is expected to boost performance and reduce costs for Oracle's customers.

"Oracle is aiming to substantially increase its gross margins over the coming quarters and years," said Epstein. Oracle's gross margins stood above 70 percent in past quarters. Oracle says that 70 percent of most companies' IT spending goes toward keeping their systems up and running, limiting what they can invest to improve performance.