Enterprise headlines and summaries, 2009-04-20

  • Tech M&A: The Challenge of Cheap Deals
    “I have to agree that organic growth and R&D are a better approach to success than acquisitions, and Apple versus Microsoft would be a prime example of how the former is better than the latter,” wrote Apple investor Scott Grannis, in an email to TheStreet.com.
  • Ballmer, IBM reportedly surprised by Oracle-Sun deal
    Reporters caught up with Microsoft CEO Steve Ballmer in Moscow to get his take on Oracle’s deal to buy Sun Microsystems for $7.4 billion. But apparently Ballmer, who is rarely at a loss for words, didn’t exactly have a sound byte at the ready. “I need to think about it,” Ballmer told reporters in Moscow, according to Reuters. “I am very surprised.” I’m hearing that Ballmer wasn’t the only one surprised by Monday’s deal. According to a source of mine, IBM hadn’t given up on purchasing Sun and was blindsided by Oracle’s move.
  • Microsoft opens mini-mall at Redmond headquarters
    Workers in the entertainment and devices division of Microsoft Corp. no longer have to leave their corporate home for entertainment. Or shopping, banking, massage or a meeting with as many as 1,400 people. As part of the company’s West Campus development in this suburb east of Seattle, Microsoft opened The Commons on Monday with 14 shops and restaurants, as well as a post office, credit union, bicycle repair shop, outdoor soccer field and conference center. It’s open to anyone with a Microsoft badge, from employees to contract workers such as shuttle drivers and gardeners, and their guests. A pub in the complex will serve alcohol after 3 p.m. and by group reservation. There’s also a company store.
  • UPDATE:IBM 1Q Net Falls 1% On Global Rev Drop;Affirms FY View
    International Business Machines Corp. (IBM) on Monday said first-quarter net income fell 1% as currency fluctuations and weaker technology spending dragged earnings lower around the world, more than offsetting improvement in the company’s overall margins. The tech bellwether, which has weathered the economic slowdown through aggressive cost management, also dismissed news earlier in the day that rival Oracle Corp. (ORCL) agreed to pay $7.4 billion to buy Sun Microsystems Inc. (JAVA), which IBM had considered buying only weeks ago. IBM reaffirmed its full-year earnings guidance of $9.20 per share. It also reported revenue below Wall Street expectations. Armonk, N.Y.-based IBM reported net income of $2.3 billion, or $1.70 a share, down from $2.32 billion, or $1.64 a share, a year earlier. Revenue decreased 11% to $21.7 billion. The drop would have been 4% excluding impacts from the stronger dollar.
  • Article – WSJ.com
    The $7.4 billion sale of Sun Microsystems Inc. (JAVA) to Oracle Corp. (ORCL), announced Monday, won’t be the best return ever recorded by Kohlberg Kravis Roberts & Co. But in a sign of the times, it is likely quite good enough that it will deliver a timely dollop of cash for Kohlberg Kravis Roberts & Co.’s listed affiliate KKR Private Equity Investors LP (KPE.AE) KPE teamed with Citigroup Inc. in January 2007 to buy $700 million worth of convertible notes in Sun. The two evenly split the investment. KPE hasn’t converted or sold any of its notes, according to a person familiar with the situation. In the event of a change of control – such as the Oracle deal – the notes will be “taken out at par,” or repaid at cost plus accrued interest, according to the person. That means KPE should get at least $350 million when the deal closes. That’s a nice turnaround for the firm, considering that in its year-end results it reported that the investment had decreased in value by $167.4 million.
  • India’s Tata Consultancy Services Q4 net profit up
    India’s largest software exporter Tata Consultancy Services Monday said net profit rose 4.61 percent in the fourth quarter, hit by lower fees and cuts in technology spending due to the global economic slowdown. Net profit was 13.14 billion rupees (268 million dollars) for the quarter ending March, up from 12.56 billion rupees in the same period a year ago, according to US accounting norms. Revenues for the quarter rose 18.6 percent to 71.72 billion rupees, a statement to the Mumbai stock exchange said. For the full year, TCS showed a 4.5 percent rise in consolidated net profit at 52.56 billion rupees (1.07 billion dollars), from 50.26 billion rupees a year earlier.
  • Our Full Analysis of the $7.4B Oracle-Sun Deal
    * The deal could mean trouble for Sybase, which has a lot of customers on Solaris. * It could prove challenging for non-database users of Solaris, for it’s not clear how Oracle will treat Solaris. * It’s good news for Java, as two major corporate giants will be supporting it and will be forced to play nice with each other. * Oracle will keep MySQL going mostly because it can act as a funnel for further business opportunities. Miko Matsumura, VP and deputy CTO at Software AG, has a contrarian take on the merger. He predicts it will be a disaster, with thousands of layoffs. He is right about the layoffs; President Safra Catz was pretty explicit in saying that Sun’s hardware business will be profitable, where one could expect the research team to be slashed along with other products.
  • Where is the MySQL in Sun’s announcement
    I find it surprising that in the official Sun Announcement there is no mention of MySQL for two reasons. Firstly, this was Sun largest single purchase of $1 billion only 12 months ago. Second, MySQL’s largest competitor is Oracle. While the Sun website shows the news in grandeur, the MySQL website is noticeably absent in any information of it’s owners’ acquisition.
  • TBR: Microsoft tops in revenue but Salesforce.com leads in growth
    Despite the economic recession, Microsoft was able to retain the revenue-leading position in TBR’s 4Q08 Software Business Quarterly (SBQ) Benchmark. The company posted double-digit growth in services as customers looked to optimize existing IT infrastructure rather than invest in new software. Microsoft was able to leverage its scale, deep installed base in the Americas and strong maintenance revenue streams to deliver industry-leading performance. TBR believes the company’s continued investment in expanding into the SMB and vertical markets will position it to garner additional maintenance revenue in coming quarters. Customers continued to seek software solutions that help lower costs and increase flexibility, and the top-five revenue growth leaders in TBR’s 4Q08 SBQ Benchmark all specialize in emerging software technologies, including cloud computing and virtualization. Salesforce.com took the top position for growth as its low-cost SaaS models appealed to customers’ price conscious
  • Takeovers Complicate Tech-Firm Ties, Unsettle Some Corporate Customers
    Oracle’s $7.38 billion agreement to acquire Sun moves the software company into areas in which it has had a relatively small presence. In acquiring Sun, Oracle gets into selling computer-server systems, which puts it in competition with existing partners such as Hewlett-Packard Co. The deal also expands Oracle’s software offerings in areas like databases and managing back-office computer functions, increasing its rivalry with companies like Microsoft Corp. and International Business Machines Corp.
  • TIBCO CEO worries about Oracle-Sun deal’s impact on IT industry
    Will there be confusion and even fear in the Java community? Can Microsoft take advantage of that? Will there be disruption in the hardware server business that works to the advantage of Cisco? Vivek Ranadive, CEO of TIBCO Software, sees a lot of question marks around Oracle’s proposed acquisition of Sun Microsystems. “I’m sure there’s nervousness in the Java community,” Ranadive said in an exclusive interview with BriefingsDirect. “Can they trust [Oracle Chairman and CEO] Larry Ellison? What’s he going to do with this control? Is he going to manipulate Java so he gets an advantage? Is he going to make it less open? Is he going to find ways to start charging customers for it? There are a lot of question marks.”
  • Why the basically good choice of Aneesh Chopra for US CTO scares the bejeesus out of me
    For the record, my top three seemingly-to-be-ignored, utterly critical government IT challenges are, in declining order: * We need a radically new legal structure for privacy and the government use of information. Failure to act in a timely fashion could literally lead to the end of liberty as we know it. * Large-project contracting and technology acquisition are totally broken. We also need a new legal structure for those. * Once contracting is somewhat cleaned up, we need an agency-spanning consolidation project to radically reduce the number of systems and data centers the Federal government operates.

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