A July E.U. court ruling sanctioning the re-sale of software licenses could damage the European sales of enterprise software vendors such as Microsoft (MSFT), Oracle (ORCL), and SAP, as cost-sensitive companies opt for second-hand "copies" selling at a 30%-70% discount. Germany's UsedSoft, the winning party in the E.U. ruling, says it has seen demand triple since the decision was made. Most U.S. software contracts forbid the re-sale of licenses.
Oracle (ORCL) has launched an appeal in a lawsuit over accusations that SAP unit (SAP) TomorrowNow wrongfully downloaded millions of Oracle files. Last month, SAP agreed to pay Oracle $306M in damages "to save the time and expense" of a new trial," as the rivals' lawyers put it. However, a jury had originally awarded $1.3B to Oracle in a verdict that was later voided by a judge.
Cloud ERP and HR software firm Workday, which used the JOBS Act to quietly file for an IPO in July, has finally provided an S-1. The company, which wants to raise up to $400M and will use the symbol WDAY, posted revenue of $119.5M (+118% Y/Y) in the 6 months ending July 31, and a net loss of $46.9M. Deferred revenue totaled $247.5M as of July's end. The white-hot market for enterprise tech IPOs suggests Workday should get a favorable reception, though its offering comes at a time when Oracle and SAP are encroaching on its turf.
More on IBM-Kenexa: The acquisition is notable given IBM, a major provider of "infrastructure" software such as databases, systems management, and middleware, has tread cautiously in application software, out of fear of disturbing partnerships. Not everyone expected Big Blue to respond to SAP and Oracle's cloud HR moves in kind. The Kenexa deal speaks of the growth opportunity IBM sees in cloud application software, and the increasing willingness of IT giants to step on each others' toes to pursue growth.
IBM is buying cloud HR software vendor Kenexa (KNXA) for $1.3B, or $46/share. The price represents a 42% premium to Kenexa's Friday close. The acquisition follows SAP and Oracle's purchases of peers SuccessFactors and Taleo, and comes as Workday, another big name in the space, prepares an IPO. Cornerstone OnDemand (CSOD), a cloud HR name that hasn't found a buyer yet, could trade higher on the news. IBM expects the acquisition to close in Q4. (PR)
SAP is open to making more acquisitions, says co-CEO Jim Hagemann Snabe; he adds the enterprise software giant wants 2/3 of its long-term growth to come through internal expansion, and 1/3 from M&A. SAP has committed $7.7B over the last nine months to acquiring enterprise cloud software vendors SuccessFactors and Ariba. (more on SAP's cloud efforts: I, II, III)
SAP (SAP) has instructed employees to limit costs after the software company's 1H profits failed to reach internal targets, German magazine WirtschaftsWochereported yesterday. While SAP's official full-year guidance is for €5.05-5.25B, its goal for bonus payments is €5.3B.
SAP is paying archrival Oracle (ORCL) $306M in damages to make a long-running intellectual property theft suit go away. A jury awarded Oracle $1.3B in damages in 2010, but a judge lowered that figure to $272M last year. SAP has already paid $120M in legal fees to Oracle, and a $20M fine to the DOJ.
More on SAP (SAP) Q2: net profit rises to €661M from €587M a year earlier and beats estimates. Revenue from new software licenses in EMEA +20%, excluding currency swings. "We are now taking very strong market share," says co-CEO Jim Hagemann Snabe, with Q2 sales growth exceeding 10% in "flat markets." Shares +2.9%.
SAP (SAP): Q2 EPS of €0.55 may not be comparable with consensus of €0.76. Revenue of €3.9B (+18.1%) in-line. Assuming constant currencies, sees FY12 non-IFRS software and software-related service revenue increasing in a range of 10-12% and non-IFRS operating profit of €5.05B-5.25B. (PR)
SAP +3.9% after reporting preliminary Q2 revenue of €3.9B ($4.75B), up 18% Y/Y and above a consensus of €3.8B. Software revenue was €1.06B (+26% Y/Y), and operating profit was €0.92B. SAP's software growth soundly exceeded the 7% license growth delivered by archrival Oracle (ORCL) in its May quarter, as well as its 0%-10% guidance for the August quarter. The results are a breath of fresh air for enterprise software following warnings from Informatica and Qlik.
In spite of Larry Ellison's bluster, Oracle's (ORCL) Exalytics database appliance isn't a threat to SAP's Hana in-memory database, writes Bernstein's Mark Moerdler. Exalytics doesn't feature Oracle's flagship 11g database software, only stores frequently-accessed data, and (naturally) doesn't work with SAP's software. Moredler is quite optimistic about Hana's long-term potential. (more on Hana)
Ariba (ARBA -0.5%), which is set to be acquired for $45/share by SAP, slips to $44.53 after the DOJ issues a second request for information as part of its review of the deal. While there are some concerns about the dominant position of an SAP-Ariba combo in enterprise procurement software, most expect the deal to go through.
The open-source enemy of my enemy is my friend: Red Hat (RHT) is forming a partnership with SAP focused on the use of SAP apps with Red Hat's virtualization software. The move, which coincides with Red Hat announcing pricing for a cloud app development platform, demonstrates how the company is trying to create an app infrastructure platform on top of its mainstay Linux software ... and thereby compete more directly with SAP archrival Oracle (ORCL), as well as VMware (VMW).