Ellison: Oracle's Hardware Business Won't Grow This Fiscal Year After All

For months, Oracle CEO Larry Ellison $4 that the company's hardware business was going to stop shrinking by February and start growing by May.

Now Ellison is saying something else: The turnaround for the hardware business won't happen until the quarter that ends in August, Oracle's fiscal Q1, 2014. Big growth won't happen until next year.

Oracle $4and hardware revenues declined $4from the year-ago quarter, $671 million versus $869 million.

Investors have been waiting since 2010 for Oracle to make good on its $7.4 billion acquisition of Sun Microsystems. Oracle closed the deal in January, 2010. By 2012, with revenue shrinking, it was regarded $4 as one of the company's worst-ever acquisitions. It also turned Oracle into a competitor with HP, its most important partner. That lead to lawsuits between the two. HP is in court right now, trying to collect from Oracle $4.

Ellison has always defended the purchase, $4, "Sun has been, by far, our most profitable acquisition. Sun's already paid for itself."

He said the $4Oracle was trimming away Sun's low-margin commodity products to focus on more profitable pieces, what he calls "engineered systems." Engineered systems combine hardware and software, all designed to work together.

It was all going to balance out by February when revenues would stop declining, he promised.

$4 but eventually enterprise customers need to buy into it, too.

Here's what Ellison told analysts about the turnaround on Oracle's $4

"We think Q4 will be better than Q3, as far as the hardware is concerned, but I think we expect the turnaround really to begin in Q1, not in Q4, because we have this large introduction of new systems. ....... Again, I think Q1 you're going to see a big turnaround, and next year will be a big growth year for our entire hardware business. The front line and all of the engineered systems."