Nico Grant (Bloomberg) -- Oracle Corp. said Chief Executive Officer Mark Hurd will take a leave of absence for health-related reasons. Founder Larry Ellison and Safra Catz, who shares the CEO role with Hurd, will assume Hurd’s responsibilities during his absence.
In a statement on Wednesday, the company didn’t specify what health issues Hurd is facing or say how long his leave would be. Hurd, 62, has served as CEO for five years and has spent a total of nine years at the world’s second-largest software maker, where his responsibilities have included managing the company’s sales organization, marketing and industry-specific software groups. Catz, 57, is a longtime Oracle executive who runs a range of departments including legal, finance and operations.
Hurd’s tenure as one of Oracle’s CEOs has been marked by a rocky transition to cloud-computing software. Sales have stagnated amid uneven demand for the company’s broad program suite, with cloud-based tools growing quickly and legacy products languishing. Hurd has played a key role evangelizing Oracle’s message to investors and the public. He set a goal for the company to clinch a 50% share of the cloud applications market, targeting competitors including Salesforce.com Inc., SAP SE and Workday Inc.
Oracle shares declined 4% in extended trading following the announcement of Hurd’s leave of absence, and after the company reported fiscal first-quarter sales that fell short of analysts’ projections. The stock had gained 1.5% to $56.29 at the close in New York. Oracle had been scheduled to report earnings on Thursday.
Revenue in the period that ended Aug. 31 was $9.22 billion, the Redwood City, California-based company said in a separate statement. Analysts on average had expected $9.29 billion, according to data compiled by Bloomberg. The sales shortfall underscores the challenge facing Oracle as it shifts its business to cloud computing.
Net income in the recent period dropped to $2.14 billion, or 63 cents a share, from $2.27 billion, or 57 cents, a year earlier. Excluding certain items, per-share profit was 81 cents, matching the average analyst prediction. Short-term deferred revenue, a measure of future sales, was $10.1 billion.
Under Catz and Hurd, Oracle has struggled to sustainably grow sales amid strong competition from cloud-computing leaders Amazon Web Services and Microsoft Corp. Oracle said in June that more customers were signing up for the company’s crucial Autonomous Database product on a trial basis. Investors are waiting to see whether the company will be able to turn these trials into lucrative contracts. AWS offers a variety of cloud-based databases, which Ellison has criticized for being insufficiently sophisticated or secure. Oracle has tried to prevent AWS from getting a $10 billion cloud-computing contract with the Pentagon, suing the U.S. government to put itself back in the running for the deal.
Hurd came to Oracle after serving as CEO of Hewlett-Packard Co., the computer maker that had been the world’s largest technology company by revenue. Previously, he helmed NCR Corp., which makes store checkout machines and ATMs.
In an email to employees included in the statement, Hurd said that he had confidence Catz, Ellison and the rest of the management team would do a “terrific job executing” the company’s plans during his leave.
“Though we all worked hard together to close the first quarter, I’ve decided that I need to spend time focused on my health,” he wrote.