Billionaire Oracle CEO Larry Ellison doesn't expect the U.S. economy to significantly improve until halfway through the next decade – a gloomy scenario he dubbed an L-shaped recovery.

"The American consumer is so deeply in debt, this is not going to come back, certainly for five years," he told a packed ballroom at a Churchill Club event in San Jose. "I believe we're going through some fundamental changes." More

She's CEO Larry Ellison's secretive but effective right hand, and one of the most powerful women in Silicon Valley. But who is she, really?

Catz is yin to Ellison's yang. Photo: Jay Mallin, Bloomberg News

After months of on-again-off-again negotiations to sell itself to IBM, Sun Microsystems this spring found a new, if unlikely, suitor. Oracle, the business-software giant, in many ways promised to be a better fit for Sun, the beleaguered maker of server computers.

A Silicon Valley neighbor whose CEO, Larry Ellison, is pals with Sun chairman Scott McNealy, Oracle (ORCL, Fortune 500) posed less of an antitrust risk because it wasn't already selling hardware like IBM (IBM, Fortune 500).

But Oracle's all-cash offer of $9.50 per share, or $5.6 billion minus Sun's cash and debt, bested IBM's per-share bid by a mere 40 cents. So on the afternoon of Saturday, April 18, during a Sun board meeting called to pick a winner, CEO Jonathan Schwartz did what chief executives must do in such situations. He phoned Oracle to ask for more money.

He didn't call Ellison, his titular counterpart. Instead, he dialed Safra Catz, Oracle's president. Schwartz proposed a higher price, which, in the dry language of a subsequent securities filing, "Ms. Catz stated would not be acceptable to Oracle." Tail between its collective legs, Sun's board of directors accepted Oracle's final offer that weekend, informed IBM it was out of the game, and on Monday morning announced the shocker of a deal. Read the rest of the story here.

Oracle CEO Larry Ellison says he wants to keep Sun's hardware business, but he might be bluffing. Photo: Oracle

Could the Sun still come out at HP?

It’s no secret that Larry Ellison wanted Sun Microsystems (JAVA) for its software, not its servers. Regulatory filings show that before the hard-charging Oracle (ORCL) CEO put together his successful $5.6 billion offer and outbid IBM (IBM) for Sun in April, another party was kicking the tires as well.

One of the worst kept secrets in Silicon Valley is, that someone was Hewlett-Packard (HPQ) CEO Mark Hurd.

Since then, though, Ellison has said that he intends to keep all of Sun for himself. More

Cisco CEO John Chambers needs to try new things to keep his company growing while corporate technology budgets shrink.

It is the buzz of the tech world: Cisco Systems may soon try selling servers, those heavy-duty computers that companies use to run critical back-office applications. The prospect of router giant Cisco's entering the already crowded $55-billion-a-year server market is intriguing (imagine if LeBron James decided to try his hand at football) but also has the potential to disappoint. (Remember Michael Jordan's ill-fated effort to play professional baseball?)

With his server gambit, Cisco (CSCO, Fortune 500) CEO John Chambers appears to be targeting a very specific niche: the trendy "virtualization" segment of the server business, which is expected to grow 43% this year to $2.7 billion worldwide, according to research from Gartner. Virtualization basically is a way to make servers more efficient. Using specialized software, one computer with a hard drive and a network connection can act like several smaller computers and hard drives on different networks. When everything goes right, more work gets done with less hardware and electricity. Multiply that effect in a data center with thousands of servers, and you can see why corporate customers like it, especially in times of cutting costs. Computer maker Dell (DELL, Fortune 500), for example, believes it can cut its information technology budget 10% this year without sacrificing productivity.

Full story (CSCO) (IBM) (HP) (DELL) (VMW) (INTC) (AMD) (MSFT) (JAVA)

In a surprise announcement, Intel (INTC) said Wednesday that its gloomy fourth quarter forecast wasn't nearly gloomy enough. Instead of pulling in between $10.1 billion and $10.9 billion in sales, the chip giant expects closer to a dreadful $9 billion. The stock tumbled more than 7 percent after hours.

It's hard to articulate just how bad this news is. More

Bryan Cantrill and Mike Shapiro, Distinguished Engineers at Sun, dreamed up a new type of storage product and convinced executives to let them build it in relative isolation. Image: Sun

Maybe there's something about unconventional office space that gets Silicon Valley's creative juices flowing.

Bill Hewlett and Dave Packard worked their magic in a garage. Apple's (AAPL) Macintosh development team flew a pirate flag over the Bandley 3 building. Now Sun Microsystems (JAVA) hopes a young team that toiled in an unmarked — and reportedly unkempt –  San Francisco loft can spark a turnaround in a tough economy, and build a new billion-dollar business. More

Despite the downturn, AMD is hopeful that it can sell its higher-performance server chips; and the early reviews are positive. Image: AMD

Sun Microsystems sells a lot of servers to the financial services industry, which has been hard-hit by the credit crunch. So when Sun CEO Jonathan Schwartz recently asked a banking executive how he was doing, he probably wasn't surprised at the response: "I'm curled up in the fetal position."

Investors can relate. Last week Sun (JAVA) warned that it would report a huge loss for the summer quarter, news that sent shares skidding 17%. But despite the doom and gloom, Sun expects to keep getting server orders from banks and other customers. After all, with all those Wall Street traders dumping stocks, somebody's still got to process the transactions. And that's part of the reason why Advanced Micro Devices (AMD) is optimistic that its new server chip, code-named Shanghai, will do well despite the downturn. More

HP CEO Mark Hurd is taking a risk by bidding for troubled services player EDS. Image: HP

Hewlett-Packard CEO Mark Hurd has built a world-class reputation as a cost-cutting turnaround artist, and he's risking it all with a smart bid for technology services giant Electronic Data Systems.

HP (HPQ) announced Tuesday that it would pay $13.9 billion in cash for Texas-based EDS (EDS), which manages technology projects for a range of large clients. If HP does it right, buying EDS is the business equivalent of a triple-play. In one fell swoop HP is more than doubling the revenue of its services arm, mounting a more serious threat to IBM (IBM), and shutting down a distribution channel for other competitors. More

Adobe has tipped its hand, and it now seems clear that it needs Apple's iPhone more than Apple (AAPL) needs Adobe's Flash. But it's not at all clear that Adobe (ADBE) will get the foothold on the device it seems to want so badly.

Two weeks ago Adobe turned the other cheek when Steve Jobs' publicly slighted Flash and Flash Lite, describing the first as "too slow to be useful" on the iPhone and the second as "not capable of being used with the Web." See here.

Nonetheless on Tuesday, during Adobe's quarterly conference call, CEO Shantanu Narayen announced that his company has begun development of a version of Flash specifically for the iPhone — surprising even his PR staff.

"We believe Flash is synonymous with the Internet experience, and we are committed to bringing Flash to the iPhone," he said. "We have evaluated (the software developer tools) and we think we can develop an iPhone Flash player ourselves." (link)

Presumably Adobe intends this version to fit what Jobs described as "missing product in the middle" between Flash and Flash Lite.

But there are other ways to deliver rich-media applications to the iPhone. Sun Microsystems (JAVA) has announced that it is developing a version of Java for the iPhone, for example, and Apple has some home-grown solutions of its own. (See Kontra's Runtime Wars (1) and (2) for a summary of Apple's options.)

And it's not clear that even this new version of Adobe Flash will thrive in the iPhone ecosystem unless Apple decides to allow it.

Daniel Eran Dilger at Roughly Drafted Magazine has already expressed his skepticism, arguing that it's no more in Apple's interest to become dependent on Adobe than it would be to become dependent on, say, Microsoft (see here).

Daring Fireball's John Gruber is even more dismissive. "Adobe Smoking Same Dope as Sun," was the headline of his post on the subject. He points out that the iPhone SDK explicitly states that no "interpreted code" can be downloaded and used in an application except those that are run by Apple's published program interfaces (APIs).

"Without approval from Apple (including APIs beyond those in the current third-party SDK)," Gruber writes, "they can distribute it in the same alternate universe as Sun’s supposedly-in-the-works Java port." (link)

UPDATE: Gruber is right about that, as Adobe acknowledged in the clarifying statement it issued on Wednesday:

Adobe has evaluated the iPhone SDK and can now start to develop a way to bring Flash Player to the iPhone. However, to bring the full capabilities of Flash to the iPhone Web-browsing experience we do need to work with Apple beyond and above what is available through the SDK and the current license around it. (link)