| ||Thread Tools|
|7th July 2004, 20:08||#1|
Join Date: Mar 2004
Software Meat Eaters
By Tom Taulli
July 7, 2004
If Chinese philosopher Sun Tzu were transported from 500 B.C. to 2004 A.D., he would probably be a high-paid management guru for the software industry. On his lecture circuit, he would quote such strategies from his best-selling book, The Art of Execution: "Software is a matter of life and death. First, you need to attack your competitor with a sudden all-cash hostile takeover. If this is rebuked, then create disorder by dragging your competitor into the American court system."
This is basically Oracle's (Nasdaq: ORCL) business strategy, and it is working perfectly, as evidenced today by PeopleSoft's (Nasdaq: PSFT) warning for its second-quarter sales and earnings. According to PeopleSoft's management, Oracle's hostile bid and antitrust lawsuit is generating bad PR for the firm, which has had "substantial" adverse impact on the company's business.
While Wall Street consensus was for $0.21 a share on $689.3 million in revenues, PeopleSoft indicated that earnings will range between $0.13 and $0.15, with revenues from $655 million to $665 million.
Antitrust trials are costly and time-consuming. Take Lawson (Nasdaq: LWSN), which is an enterprise software company and on the target list for Oracle CEO Larry Ellison. Last quarter, management said that the firm experienced customer pushback because of the trial.
Oracle, on the other hand, does not have to worry about such things. Rather, it has billions of cash on its balance sheet earning a measly amount of interest. Why not use the hoard to blitzkrieg the competition?
True, Ellison has always been a meat eater in terms of dealing with his competitors. But, his hostile takeover attempt and massive fight in the courtroom are signs that the enterprise software market is changing fundamentally. That is, it's not a growth story any more.
So far this week, there have been a variety of major warnings from software companies, such as Veritas (Nasdaq: VRTS) and JDA Software (Nasdaq: JDAS).
Yesterday, we also got the 4,900-word missive from Microsoft (Nasdaq: MSFT) CEO Steve Ballmer, who announced $1 billion in cost cuts and rallied the troops to win more business. Ballmer also warned against new disruptive technologies, such as Linux. Yes, enterprise software developers worry about customer resistance and upstarts such as Salesforce.com (NYSE: CRM) and RedHat (Nasdaq: RHAT).
Many pundits were puzzled when Ellison decided to fight the antitrust suit against the U.S. government. Wouldn't he lose? Of course not. PeopleSoft is the loser.
Sun Tzu would be proud.
Opteron 165 (2) @2.85 1.42 vcore AMD Stock HSF + Chill Vent II
|Thread||Thread Starter||Forum||Replies||Last Post|
|Madshrimps gives away Free Anti-Spyware Software!||jmke||WebNews||0||22nd January 2008 09:06|
|HOWTO: Troubleshoot Any Networking Problem||jmke||FAQ / INFO / HOW-TO||0||15th February 2006 14:33|
|Intel Pentium 4 Developer Kit for Apple Adored by Software Makers.||jmke||WebNews||0||7th June 2005 23:08|
|More and More Software Being Tailored for 64-bit, Says Intel||jmke||WebNews||1||3rd March 2005 17:41|
|More and More Software Being Tailored for 64-bit, Says Intel||jmke||WebNews||0||3rd March 2005 16:02|
|AMD Applauds Microsoft's Decision to License Server Software by Processor||Sidney||WebNews||1||20th October 2004 02:32|
|Intel Helps to Develop 64-bit Software for x86||jmke||WebNews||0||6th October 2004 10:57|
|Leading Software Vendors Endorse AMD64 Multi-Core Technology||Sidney||WebNews||0||8th September 2004 03:43|
|IBM Storage Virtualization Software to Manage Massive Amounts of Data||Sidney||WebNews||0||26th May 2004 01:36|
|Activision and id Software Confirm Summer 2004 Ship Date for Doom 3||jmke||WebNews||0||11th May 2004 18:03|