SAP limits Oracle damages to 10m
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ERP giant outlines provision for Oracle settlement...
SAP expects to pay no more than €10m to Oracle to settle an on-going lawsuit over the downloading of large quantities of Oracle support material by the SAP subsidiary, TomorrowNow.
In briefings following SAP’s second quarter financial results announcement, CFO Werner Brandt confirmed that the company has made provision for damages of up to €10 million, despite speculation elsewhere that any settlement could be closer to an order of magnitude higher.
Earlier in July, SAP admitted that a quantity of “inappropriate downloads of fixes and support documents [had ] occurred at TomorrowNow” - a third-party specialist in migrating customers off Oracle’s PeopleSoft and JD Edwards applications that was acquired by SAP in 2005 but which still had access to the Oracle support network through the passwords of some of its clients. Although Oracle says the downloads were running at 1,800 items a day at one stage, SAP claims the material never went beyond TomorrowNow’s systems.
Since Oracle launched its case in March, several TomorrowNow employees have been fired and a senior manager is currently suspended.
Werner outlined how SAP has a general provision of up to €10 million for any pending or future lawsuit. What has surprised some observers, though, is that the company has not increased that in anticipation of the possible outcome of the Oracle legal tussle.
The lawsuit sits against a backdrop of an upbeat financial performance by SAP. In its second quarter ending 30 June, the company reported revenues up 10% globally to €2.42 billion, though when measured at constant currency (CC) rates underlying growth was actually 14%.
That was driven by a 19% CC growth in software and related service revenues, with strong performances in all regions - except the US. Software and related service revenues in the EMEA region were up 17% at CC rates and grew by 29% in Asia/Pacific.
The picture was less rosy in the US where software sales were up 11% at CC rates (or 4% actual). Werner pointed to a general softening of demand in the US in recent quarters. Last month, Oracle reported that its applications software revenues from the Americas region had fallen by 4% in its latest quarter, again when measured at CC rates.
Meanwhile, SAP is gearing up for the launch of a much-anticipated on-demand applications service in the third quarter. Codenamed ‘A1S’, the hosted service, which will also later be available as a standalone ‘appliance’ for those with unreliable network connectivity, will be targeted at mid-market companies with annual revenues of less than $1 billion who are seeking rapid implementation of business applications delivered as a service.
