Oracle Corp Chief Executive Larry Ellison said on Monday the database software giant might pay a dividend to stockholders, once the pace of acquisitions in the rapidly consolidating business software industry slows.
Speaking at Oracle's annual meeting in New York, Ellison said that considerations for a dividend were "not unreasonable". The meeting was broadcast over the Internet.
But for now, Ellison said there were better ways to boost returns for shareholders. Redwood Shores, California-based Oracle has about $4.8 billion in cash and short-term investments.
"In general it is our assessment that the repurchase of stock and acquisitions ... are a better use of cash than a dividend," he said.
"After the consolidation phase of the enterprise software industry is slowing down we certainly might decide things have changed."
Ellison said the enterprise software market was still in the early stages of consolidation even after Oracle's multiple and recent acquisitions. He also said some of Oracle's competition for take-over targets could come from venture capital firms.
He also singled out BEA Systems Inc as a much less attractive target than it had been in the past, saying that the software company was no longer a formidable competitor but that many others remained.
"While BEA is a less attractive candidate, it doesn't mean we are running out of targets," Ellison said, reiterating his recent comments that Oracle was gaining share against BEA, a provider of software that stitches together software programs and underlying operating systems.
Oracle has been an aggressive acquirer of rivals both small and large. Since January the company has closed seven acquisitions, including its $10.6 billion hostile take-over of PeopleSoft Inc.
Last month Oracle also made a $5.85 billion bid for rival Siebel Systems Inc to give it a stronger foothold in customer management and supply-chain management software as it challenges industry leader SAP of Germany.
Ellison told shareholders there were far more sellers than buyers and he predicted that consolidation in the industry could reach its final stages in as few as five years.
"We are fairly early on in consolidating enterprise software," Ellison said. "It is early on but it is a short game."
Oracle Chairman Jeff Henley, the company's former long-time chief financial officer, also estimated that the cost of expensing stock options - which the company will begin in June - would reduce earnings by about 5 percent, or 2 cents to 3 cents per share.
The company's shareholders also re-elected 11 members to its board of directors, approved an executive compensation plan - which includes about $1 million per year for Ellison's estate - and reappointed Ernst & Young as the company's accountants.