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)

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