By Aaron Tilley
Oracle Corp. said it has changed its corporate headquarters to
Austin, Texas, the latest high-profile defection from Silicon
Valley.
The company and its founder and chairman, Larry Ellison, are
pillars of the Bay Area. Oracle's name adorns the stadium home of
pro baseball's San Francisco Giants. Mr. Ellison is known for his
lavish homes in the region.
Oracle, which was founded in Santa Clara, Calif., in 1977, most
recently had its headquarters up the road in Redwood City. The
software giant and Silicon Valley stalwart said the relocation was
part of an effort to have a more flexible approach to its
workforce.
It wasn't immediately clear what Oracle's decision means beyond
having a new address for its headquarters. The company said it had
no plans to move staff from its existing headquarters to Austin,
and Oracle's state tax bill makes up only a small portion of its
overall expenses.
Oracle joins others in moving some operations away from the
region that for decades has been synonymous with America's tech
industry. Hewlett Packard Enterprise Co. earlier this month said it
was moving its headquarters to the Houston area. Palantir
Technologies Inc., founded in the Bay Area in 2003, moved its
headquarters to Denver this year, and company co-founder Joe
Lonsdale, a venture capitalist, moved to Austin.
Many of the executives that are turning their back on Silicon
Valley share conservative political views and, at times, have taken
issue with what they regard as the region's liberal politics. Two
prominent conservative venture capitalists, Peter Thiel and Keith
Rabois, have cited what they see as Silicon Valley's political
leanings as reasons to relocate.
Mr. Ellison earlier this year threw a fundraiser at his house
for President Trump, and Oracle Chief Executive Safra Catz worked
on the executive committee for the Trump transition team in
2016.
Greg Abbott, Texas' Republican governor, cheered the Oracle
news, tweeting: "Texas is truly the land of business, jobs, and
opportunity." The state doesn't collect state income or
capital-gains tax for individuals.
California's tax regime has its share of critics. Its
personal-income tax tops out at 13.3% for amounts over $1 million a
year, the highest in the nation. Capital gains are taxed at a
similar rate.
Oracle reported tax expenses of $1.9 billion in the fiscal year
that ended on May 31, according to its securities filings. Of that,
about $172 million were state tax expenses.
The mailing address of a company's headquarters doesn't
determine where it pays the bulk of its taxes. Companies generally
divide their U.S. earnings among the various states where they do
business according to formulas that can reflect sales, employment,
physical facilities or other factors. A company moving its
headquarters to Texas from California wouldn't necessarily stop
paying California's corporate income tax.
California's newly appointed senior adviser to Gov. Gavin Newsom
on economic development, Dee Dee Myers, said in a statement:
"California has a unique combination of assets, including our
spirit of innovation, inclusive culture, unparalleled workforce,
and access to new technology and capital that make this state a
great place for businesses to start and grow."
This week Tesla Inc. Chief Executive Elon Musk said he had moved
himself from California to Texas. The electric-car maker is
building a new plant in Austin and Mr. Musk's rocket company, Space
Exploration Technologies Corp., or SpaceX, has operations in South
Texas. Mr. Ellison sits on Tesla's board.
Oracle already has a presence in Austin. In 2015, the company
announced plans to build a new corporate campus in the city. That
year it also bought Austin-based software company StackEngine Inc.
The Austin campus opened in 2018 and features apartments and
restaurants on site.
The decision by Oracle to facilitate greater flexibility for
employees is another signal that the trend toward more remote
working brought on by the pandemic could outlast the health
crisis.
The push for flexibility has meant the addition of corporate
jobs and remote workers in Texas, with its lure of lower costs. Its
capital Austin, in particular, has been able to attract businesses
because of the supply of skilled workers in a town that is home to
the University of Texas. The area also has actively courted outside
companies, offering local tax incentives to companies such as
Tesla.
Since its founding, Oracle grew into one of the biggest software
providers. But the company was slow to adapt to the emerging field
of cloud computing that has lifted the fortunes of rivals such as
Microsoft Corp. and Amazon.com Inc. Oracle has now pivoted to
pursue cloud growth, but without the kind of top-line gains some
competitors have seen. Oracle on Thursday posted a 2% quarterly
sales increase from a year earlier. On a call with analysts, Mr.
Ellison blamed constrained capacity within its cloud infrastructure
for not growing more quickly.
The company declined to comment on its relocation beyond its
statement or say whether Mr. Ellison himself was moving. .
"Many of our employees can choose their office location as well
as continue to work from home part time or all of the time," the
company said. "We will continue to support major hubs for Oracle
around the world, including those in the United States such as
Redwood City, Austin, Santa Monica, Seattle, Denver, Orlando and
Burlington, among others, and we expect to add other locations over
time."
Mr. Ellison and Ms. Catz, said the company wouldn't move
employees to Austin.
Richard Rubin contributed to this article.
Write to Aaron Tilley at aaron.tilley@wsj.com
(END) Dow Jones Newswires
December 11, 2020 20:28 ET (01:28 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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