What if Larry Ellison Is Right About Steve Jobs?

Larry Ellison isn't afraid to speak his mind.

Oracle's (NYSE: ORCL  ) CEO has never shied away from calling out the competition by name in the enterprise software giant's conference calls, and he's never been one to mince words when talking about tech giants that aren't direct threats to his company.

He was also a close friend of Steve Jobs, so it was only natural for Charlie Rose to ask Ellison about Apple's i (NASDAQ: AAPL  )  iconic visionary in an interview that aired on CBS This Morning yesterday ahead of this weekend's theatrical release of Jobs

"What happens to Apple without Steve?" he was asked.

"We already know," Ellison responded. "We conducted the experiment."

He then went on to explain that Apple tanked under John Sculley after Jobs was ousted, implying that the same thing is happening now with Jobs' more permanent departure.

Now, to be fair, Apple is trading 33% higher since Jobs passed away 23 months ago. That's not enough to beat the market. The S&P 500 has soared 48% since Jobs died. However, you won't find too many people calling increasing your stock's value by a third in less than two years a failure.

However, there is a crisis of confidence at Apple, and that's something that probably wouldn't be happening if Jobs was still around. It's not that Jobs would've had bar-raising products on the market by now. Even if things were exactly as they are now -- with margins, market share, and profitability sliding -- the market would be confident that Jobs would have something cool on the way. Jobs always found a way to "one more thing" his company's way to relevance.

Reality isn't as compelling. We've had days to digest reports that Apple has a media event slated next month to introduce its next iPhone, and the buzz isn't as electric as it was when Jobs was still around. The iPhone 5S will likely have the same smallish form factor that has fallen out of favor in a world of larger Android phones. The long-rumored cheaper smartphone -- the iPhone 5C -- is no longer being seen as a difference maker. Apple can never get cheap enough to compete with the entry-level Android devices in markets where wireless carriers don't subsidize handsets, and if it could, it would destroy the already emaciated margins. 

These things may not be CEO Tim Cook's fault. However, Jobs would have been able to sell the lull better. 

Apple's leadership isn't getting a lot of respect these days. The crisis is real, even if the critic may not be the best authority in judging success these days. 

The surprise ending here is that as uninspiring as Apple's 33% gain since Jobs' death may be, Oracle's own stock has only climbed 15% higher in that time.

We conducted the experiment.

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Read/Post Comments (6) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 14, 2013, at 6:21 PM, cazic99 wrote:

    Who cares? Apple's closest competition is Samsung who cannot make anything without copying Apple and operates at razor thin Margins.

  • Report this Comment On August 14, 2013, at 6:25 PM, cazic99 wrote:

    Apple came out with Iphone and Ipads, suddenly Samsung makes Phones and Tablets. What has Samsung innovated last 3 years? Apple doesn't need to be god, they just need to be better than Samsung. And Apple's bank account proves that.

  • Report this Comment On August 14, 2013, at 8:26 PM, Davidovich wrote:

    Here's one more thought: Yes, Larry Ellison was Steve Job's best friend, and, as he discussed in his comments about Google, his company owns the language and tools that let developers write apps for Android. The connection here is that now that Steve is gone, Larry has no longer any allegiance to a friendship and can focus 100% on his primary goal -- to own the mobile internet space as much as possible. To that end, he wants everyone to buy Android phones, and no one -- * no one* -- to buy iPhones. Why? Because he cannot monetize iOS and he can - and I predict, will -- monetize Android. I don't doubt his sincerity in his admiration for Jobs, but I see a clear self interest in talking down Apple, esp. at this time. His focus will now be on squeezing money out of the Android ecosystem which is dependent on Oracle's Java language and tools, and that's the core of his beef with Larry Page.

  • Report this Comment On August 14, 2013, at 9:14 PM, JimRal wrote:

    "However, there is a crisis of confidence at Apple, and that's something that probably wouldn't be happening if Jobs was still around."

    Have to agree. When Jobs was still around, Apple would never look behind. Regardless if their product was a success or failure, it's on to the next project.

    Nowadays, it seems Apple will calculate what moves are the safest and take that route.

  • Report this Comment On August 14, 2013, at 9:21 PM, JimRal wrote:

    cazic99, Like Samsung, Apple hasn't innovate anything in the last 3 years.

  • Report this Comment On August 14, 2013, at 10:08 PM, Laubing wrote:

    Two things;

    1. Would Oracle survive without Larry?

    2. Everyone knows Larry has no friends!

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