Earlier today, Salesforce’s stock price was up by more than 3 percent, though it has now settled a bit, and is up a more modest 1.3 percent, to $127.24 as of 11:30 am ET.

In a note to clients today, Mark Murphy of Piper Jaffray said that Salesforce closed on a deal worth $140 million with a customer in the financial services and insurance industry. Additionally, social network giant Facebook has made what is being described as a “material commitment” to Salesforce recently. “We simply do not observe any Cloud competitors closing $140M transactions, drawing in 10,000 attendees at regional conferences, and winning as much crucial platform business with internet leaders,” Murphy wrote.

Analyst Brendan Barnicle of Pacific Crest Securities, writing in a research note issued to clients today, said he saw similar trends. “Salesforce.com had a very strong finish to its fiscal year,” he writes, adding that it “closed several very large deals with major corporate accounts, including its largest deals ever in the U.S. and Europe. In some cases, these large deals were only Sales Cloud deals, and we see further opportunity for upsell. More importantly, the strength of the corporate business refutes the bear claim that Salesforce has penetrated its opportunity.”

One point of weakness, Barnicle says, were the small and medium businesses, who pushed back against a Salesforce move to transition them to an annual billing cycle. “It sounds like Salesforce was somewhat flexible on billings terms after stating its initial goal of putting most SMB customers on annual billing,” he wrote. “However, the drive to annual billings certainly made it more difficult to close and renew SMB deals.”

And while the strong finish to the quarter is great to have now, it’s going to set up a tough compare with the quarter ending in April, Barnicle writes. In the April quarter last year, billings — a heavily watched Salesforce metric that’s tied to future revenue — grew 57 percent. This year, Barnicle expects only 19 percent growth. “We are a bit concerned that the deceleration in billings will be negative for Salesforce,” he writes. “However, the comparisons get easier in Q2 (July) and Q3 (October), and we are concerned that if investors wait to move past the difficult FQ1 comparison, they may miss the opportunity to buy CRM at current levels.”

Barnicle also raised his revenue forecast on Salesforce to $625 million, and his EPS estimate to 42 cents a share, and reiterated a target price of $157. Salesforce reports earnings on Feb. 23.

The deal can’t help but be seen as a response to SAP’s acquisition last year of SuccessFactors, a Taleo rival. Indeed, Taleo’s shares have appreciated significantly in recent months — from $29 to $42 a share over the course of two weeks in December — on speculation that it would be the next cloud company to fall to the recent burst of acquisitions in the cloud software space. And so it has.

If Taleo is a new name to you, perhaps you should go back and read this interview I did with its CEO Mike Gregoire (pictured), about a week after the SuccessFactors deal. The company had been on track to do $325 million in revenue, and has been growing at a 20 percent annual clip.

What’s strange is that Gregoire seemed uninterested in being acquired by Oracle at the time, mainly because he had lived through Oracle’s hostile takeover of PeopleSoft, and had been with that company “until the bitter end.” Apparently, Gregoire and his board have seen past any reticence about Oracle this time around.

The press release is below:

Oracle Buys Taleo

Adds Leading Talent Management Cloud Offering to the Oracle Public Cloud

DUBLIN, CA–(Marketwire -02/09/12)- Oracle today announced that it has entered into an agreement to acquire Taleo Corporation (NASDAQ: TLEO – News), a leading provider of cloud-based talent management for $46.00 per share or approximately $1.9 billion, net of Taleo’s cash and debt. Taleo’s Talent Management Cloud helps organizations attract, develop, motivate and retain human capital to improve performance and drive growth.

Together, Oracle and Taleo expect to create a comprehensive cloud offering for organizations to manage their Human Resource operations and employee careers. The combination is expected to empower employees and managers to effectively manage careers throughout their entire employment, enable organizations to retain talent and optimize costs, and improve the employee experience through faster on boarding and better collaboration with team members via social media.

The Board of Directors of Taleo has unanimously approved the transaction. The transaction is expected to close mid-year 2012, subject to Taleo stockholder approval, certain regulatory approvals and other customary closing conditions.

“Human capital management has become a strategic initiative for organizations,” said Thomas Kurian, Executive Vice President, Oracle Development. “Taleo’s industry leading talent management cloud is an important addition to the Oracle Public Cloud.”

“Taleo’s integrated cloud-based talent management solutions optimize how organizations hire, manage, develop and reward their employees and gives companies the intelligence needed to capitalize on their most critical asset — their people,” said Michael Gregoire, Chairman and CEO, Taleo. “Joining forces with Oracle gives us the opportunity to better serve our customers.”

Last year, the judge offered Oracle a choice: Accept a judgment of $272 million in damages, reduced from $1.3 billion awarded at trial, or seek a new trial. Oracle says in court filings that it wants a new trial.

The key passage of the two-page court filing reads as follows (the word “remittitur” refers to the judge’s previous order reducing the award):

Oracle has no choice but to elect a new trial, as accepting the remittitur would force Oracle to risk waiving its right to appeal the Court’s decision on the motions for judgment as a matter of law and for a new trial. Oracle’s objective is to obtain clarification of the law and, if it is right about what the law is and what the evidence supports in this case, to vindicate the verdict of the jury and Oracle’s intellectual property rights as a copyright owner. Accepting the remittitur would be contrary to this objective.

And that means that the whole thing starts over again.

Calling the $1.3 billion award “grossly excessive,” U.S. District Court Judge Phyllis Hamilton in February granted an SAP request to throw out the award. Hamilton said that Oracle never proved that it lost enough business to justify so large a judgment.

Oracle had won the award in November, after accusing SAP’s now-shuttered TomorrowNow unit of copying its software without paying appropriate licensing fees. It had been the largest judgment ever in a copyright infringement case.

At trial, Oracle accused SAP’s now-shuttered TomorrowNow business unit of illegally downloading Oracle software and then making several thousand copies of it, in order to avoid paying the relevant license fees that are Oracle’s financial bread and butter. Oracle ultimately won the claim, but then the fight turned to damages.

Lawyers for Oracle had argued that the company’s damages should be tied to the value of a hypothetical license that TomorrowNow would have had to pay for the software, had it been properly licensed. For its part, SAP had argued that, as competitors, damages should have been calculated based on profits lost by Oracle and gained by SAP as a result of the infringement, and as such is in a much lower range than what Oracle argued for.

The case has caused a lot of personal enmity between Oracle and SAP, as well as with Hewlett-Packard, especially during the 11-month period when former SAP co-CEO Léo Apotheker was CEO of HP. Apotheker’s first days on the job at HP were marred by his apparent absence from HP headquarters, in what couldn’t help but look like an attempt to avoid being served with a subpoena. Maybe Oracle will try again.

For the fourth quarter, sales were $64.1 million, up 23 percent over the prior year, led mostly by growth in subscription and support revenue. Non-GAAP profits were 5 cents per share or $3.4 million. Sales for the year were $236 million, up 22 percent year over year. The EPS number beat the consensus of analysts by a penny. Shares are up by 4 percent in after-hours trading, having risen 4 percent already during the regular session.

I’ll be talking to CEO Zach Nelson (pictured) within the hour and will be adding a comment or two from him.

Update: I just got off the phone with Nelson and we had a quick chat about the results. Here’s a summary.

AllThingsD: Zach, the results were pretty positive. You grew revenue 23 percent year on year. What’s driving the growth?

Nelson: It’s really about the acceleration of cloud computing. There no other way to say it. Cloud computing is now moving to mission-critical functions. In 2007 I said we were reaching a tipping point with the cloud, and now the market has tipped. The new generation of companies like Square and Roku think of the cloud first as they build their operations. They’re not going to build the big IT staffs that other companies have. They’re going to skip that entirely.

What kinds of headwinds are you seeing and where?

Nothing significant. We grew by double digits in Europe, Asia and the U.S. There’s been a lot of discussion about IT spending shrinking. I think that’s a tailwind for us because we help companies cut their IT spend. We help them eliminate costs.

What are you seeing in 2012? What kind of guidance did you give?

We said we see revenue in the range of $295 million to $300 million and earnings per share of 19 to 21 cents non-GAAP. We’re going to continue to grow the top line and we’re going to hire 500 people this year.

After SAP acquired SuccessFactors and Oracle bought RightNow, people started saying Netsuite is one of the cloud companies likely to be acquired soon. What do you think?

We’re a public company, and so if anyone came along with a serious offer we’d have to consider it. But our whole mission is to build the next great software company.

SAP and IBM and Oracle and Microsft have the cloud religion these days, too. They say they can deliver their apps in the cloud just as you do. What about that?

I love it when SAP and Microsoft talk about the cloud. All they do is talk, and all they do is create more demand for Netsuite. They give credibility to the product we have built over the last decade. They may try to build a product that looks a lot like Netsuite. We’ll gobble up the demand they create along the way. It will take them a decade to do it because there’s no shortcut.

NetSuite’s press release is below.

SAN MATEO, Calif., Feb. 2, 2012 /PRNewswire/ — NetSuite Inc., the industry’s leading provider of cloud-based financials / ERP software suites, today announced operating results for its fourth quarter and fiscal year ended December 31, 2011.

Total revenue for the fourth quarter of 2011 was $64.1 million, representing a 23% increase over the prior year. Subscription and support revenue for the fourth quarter was $54.2 million, representing 23% growth over the same period in the prior year. Total revenue for the year was $236.3 million, a year-over-year increase of 22%.

Calculated billings, defined as revenue plus the change in deferred revenue, were $78.8 million for the quarter, a 36% increase over the fourth quarter of 2010. For the year, calculated billings were $266.9 million, an increase of 32% over 2010.

Cash flow from operations was $11.7 million in the fourth quarter of 2011, an increase of $7.1 million, or 156%, over the same period last year. Cash flow from operations was $36.3 million for the year, an increase of $18.0 million, or 99%, over the prior year.

On a GAAP basis, net loss for the fourth quarter of 2011 was $7.6 million, or $(0.11) per share, as compared to a net loss of $6.4 million, or $(0.10) per share, in the fourth quarter of 2010. GAAP net loss for the year ended December 31, 2011 was $32.0 million, or $(0.48) per share, as compared to a GAAP net loss of $27.5 million, or $(0.43) per share, in 2010.

Non-GAAP net income for the fourth quarter of 2011 was $3.4 million, or $0.05 per share, as compared to non-GAAP net income of $2.8 million, or $0.04 per share, in the fourth quarter of 2010. Non-GAAP net income for the year ended December 31, 2011 was $10.8 million, or $0.15 per share, as compared to non-GAAP net income of $8.5 million, or $0.13 per share, in 2010.

“NetSuite’s Q4 showed the benefit of being the disrupter rather than a disruptee, as our Cloud Computing suite continued to take market share from traditional mid-market and enterprise ERP vendors. The acceleration of our business that we saw throughout the year continued into Q4, and we turned in a Q4 that could be considered our best quarter ever as a public company,” said Zach Nelson, CEO of NetSuite. “As we enter 2012, I believe we are the best positioned company to benefit from the shift to the Cloud as customers abandon aging mission critical systems designed before the Web existed and move to NetSuite.”

He’d also been heavily recruited. Sources familiar with the situation told me that Swainson had been in line for a very senior and nearly identical job at Hewlett-Packard. Swainson didn’t return my call seeking comment, and spokesmen for HP and Dell declined to comment, as well.

Dell is launching the Software Group, it said in a statement, to build out its muscle on the software side as a complement to its overall mission of selling IT services.

And there’s probably no one better to do it than Swainson. Since 2009 he’s been an adviser at private equity firm Silver Lake Partners. But from 2004 to 2009 he ran CA with one single goal in mind: Rebuilding its reputation following an accounting scandal that ended when its prior CEO, Sanjay Kumar, was sentenced to 12 years in prison. The company paid $225 million to settle federal charges brought by the Securities and Exchange Commission and the Department of Justice.

But before CA, Swainson had spent 26 years at IBM. Among the things he did at Big Blue was spend seven years as general manager of its Application Integration Middleware division, which was a business he created. It was during those years that IBM launched its WebSphere family of products.

So that leaves just one question: Who’s going to run the HP software division that it had wanted Swainson to run?

But Apple is still a consumer-focused personal computer company, and one trend I like to revisit is how Apple continues to grow its presence in business and professional settings.

Here’s a pretty good indicator: If you’re in the business of designing things like machines or buildings, there’s a chance you’re using software from Autodesk. Its latest mechanical design software, called Inventor Fusion, is used by mechanical engineers to design cars and planes and factory assembly lines. It’s heavy-duty software that’s currently available on Windows. A new trial version for the Mac has just recently come out is coming out soon.

While engineering software like this tended to be run on beefed-up Windows workstations during the last decade, the Mac has started to make serious inroads among engineers and designers, especially the younger ones, says Autodesk product manager Kevin Schneider. “The younger generation of engineers has grown up with computing expectations that are completely different,” he says. They used Macs at school, probably learned to edit photos and video in Photoshop and Final Cut Pro, so when they start using CAD and other software, naturally, they want it running on a Mac, too.

Autodesk makes four applications available on Apple’s App Store, and the results are pretty stunning. Those applications — Autocad LT, Autocad WS, Motion FX and Sketchbook Pro — have clocked up 2.2 million downloads via the App Store. That’s a lot for any software, and it’s a heck of a lot when you consider that these applications don’t come for free. Sketchbook Pro goes for $59.99; Autocad LT costs $899.99.

The number is even more impressive when you consider that Autodesk apps account for about 2 percent of total downloads on the App Store. Late last year, Apple announced that its store had broken the 100-million-download mark, generating 100,000 downloads a day, and making it the biggest software download site in the world.

It’s just another indication that the Mac is still making inroads against Windows in the workplace. A new Forrester Research survey of 3,350 IT decision makers finds that 46 percent of all firms in North America and Europe issued Macs to their employees in 2011; that figure was up by more than half since 2009.

Veghte joined HP in 2010 after 20 years at Microsoft, where he managed the $15 billion Windows business and oversaw the launch of Windows 7. At HP, he has been credited with growing its software revenue by 18 percent last year.

Given Veghte’s history as a software guy, his appointment to this role can’t help but be seen as a key signal by CEO Meg Whitman of the role she sees software playing in HP’s strategy going forward. That was one of the things I asked Veghte about when we spoke by phone earlier this week.

AllThingsD: What, in your view, is the role of the chief strategy officer at HP, and what do you expect it to entail in the coming year?

Bill Veghte: As we’re out talking to customers, they’d like to buy more from HP; they’d like HP to be more successful. They look at the advances we’re making in networking or storage or printers, but they want to know why the whole is greater than the sum of is parts. What is HP’s strategy for continued leadership in the market transitions that are going on? And some customers would say that where HP is concerned, that’s not a fully realized opportunity.

And you’re coming at it from the software part of the business, and we’ve heard from Meg saying she’d like to grow opportunities in software. Your appointment, to me, sends a bit of a signal that software is going to be a big part of HP’s strategy to get things turned around. Is that accurate?

I think, certainly, as I talk to Meg and Ray [Lane, HP chairman], and with the members of the executive committee, I’ve found that this is a catalyzing role. If done right, there are different models of strategy in different Fortune 500 companies. And the one that makes sense here is catalyzing with other business units. Whether that’s Vijay Joshi in printing and imaging, or with Todd Bradley in PCs, or John Visentin in the enterprise group, there’s a strategy that each one of those is trying, and which is accretive to a whole that is greater than the sum of the parts. And so, to the extent that software is glue or networking is glue, I think it’s a statement that has more to do with a pan-HP strategy than something that’s specific to software.

What’s Job One, starting on your first day?

Job One is making sure that as we have those conversations with customers, they see an HP that is unified around a set of constructs and offerings that deliver what they need. It’s different from having offerings that are, by themselves, individually great. It’s about having unifying themes and constructs.

It seems that you’re talking about finding a way to routinely and thoughtfully combine different things that HP makes or does, in ways they aren’t being done now. Is that what you’re getting at?

I think that very accurately characterizes the opportunity. When we talk to the leadership team, we hear a lot of the same thing. There is a lot of great stuff within HP, whether you get that in terms of market position, or IP, or people. I like how you put that: How do you routinely and thoughtfully combine things, particularly in light of the market inflections that are happening. We are in a tectonic shift, and that can be an opportunity, if you clearly spell out the value proposition for customers. Not only in each one of the units, but where you’re thoughtfully combining them so that the whole is greater than the sum of its parts.

I thought of an example around meeting the needs of the market. There was an IHS iSuppli report out earlier this week about cloud servers, which are growing. But customers are going to Taiwanese ODM companies to get customized products, while at the same time cloud servers are growing generally. Is this the sort of thing that might affect HP?

I was talking to Dave Donatelli [general manager of Enterprise Servers] about this recently. It’s interesting, because it seems like in more recent months it has flipped back, because of the integration within that customization. A great example that Dave and I have been working on is the whole cloud system piece. You’ve got a lot of great stuff in automation and orchestration software that is inherently cross-platform, and which crosses virtualization engines and marrying that deeply with the converged infrastructure. We’re the only company that can give you a single stack, soup to nuts, from a single vendor. The core construct is that there’s a lot of private cloud build-out going on, and those customers who are doing it are saying they don’t want to be the systems integrator for six different vendors, and they also prefer not to be locked in to a single vertical stack. That’s a huge advantage for us. And to your point about routinely and thoughtfully combining, we should do exactly that. It’s been doing well for us in the marketplace, but how do you make that routine against the opportunities we see in the marketplace?

You spent about 20 years at Microsoft. How does that inform what you’re bringing to this job?

At the core, any of these jobs are about identifying and exploiting market shifts for customers. I had the privilege of having a front-row seat during some big marketplace disruptions, and helping catalyze businesses and delivering superior market positions and solutions. It’s all about handling change, and turning it into an opportunity.

Deutsche Bank analyst Chris Whitmore expects some difficulties for Big Blue stemming mainly from the company’s exposure to the troubled economies of the euro zone and related currency weaknesses there. He expects the company to report sales of $29.8 billion and per-share earnings of $4.62, with his sales forecast slightly more optimistic than that of the consensus of Wall Street analysts.

Even so, he expects the strength of the U.S. dollar relative to the euro in recent months will create a headwind effect worth about 2 percentage points compared to IBM’s prior forecast in October. “Although the stronger dollar is likely to impact reported revenue, IBM remains one of the most defensive names in our universe due to its high exposure to recurring profit streams, past backlog growth and wide geographic and business diversification,” he wrote in a note to clients yesterday.

Hardware sales should be in line with forecasts as IBM has continued to gain market share away from Hewlett-Packard and Oracle. Services should continue to be a sign of IBM’s strength as its backlog of prior contracts should continue to deliver a stable stream of revenue.

One problem may come from service bookings. Whitmore thinks the consensus estimates on this closely watched number are, at $21.5 billion, a little high and thus could disappoint. IBM announced only five deals in the fourth quarter compared to seven in the same quarter of 2010. And though information about the size of the deals was limited generally, two of them combined to amount to about $740 million. “IBM’s services bookings figure is always a wildcard and the lack of many announced deals clouds visibility,” Whitmore wrote. He rates IBM a buy with a price target of $210.

The earnings report will also be the first with Ginni Rometty as IBM’s new CEO. Having already had a busy first few days on the job, it will be interesting to see if she uses the occasion of an earnings conference call to announce anything new, though that’s unlikely.

While research houses like Gartner and IDC can’t seem to slash their 2012 spending forecasts fast enough to keep up with the ever-gloomier outlook, it’s a different scene in the area of servers used to build cloud services.

IHS iSuppli is out with some new research saying that the number of cloud servers sold this year will be 875,000 — or nearly double the 460,000 sold in 2010 — amounting to a surge of 35 percent over 2011, when 647,000 were sold.

And it gets better: The rate of growth is expected to continue over the next three years, in the 20 percent to 30 percent range. Cloud server sales will grow at a rate that’s five times faster than the rate of growth for general-purpose servers, iSuppli says.

And while cloud servers amount to only a 5 percent sliver of the overall server market now, by 2015, that will reach 15 percent. Apple, Google, Amazon and IBM will be pushing more cloud services to companies and to consumers; cloud-services companies like Salesforce.com, Workday and NetSuite, to name just a few, will be adding more services and more capacity as their businesses grow.

It’s good news for companies turning out servers, like Hewlett-Packard, Dell, IBM and even Cisco Systems, which is an increasingly important player in the server market, along with chipmaker Intel.

There is one wrinkle, iSuppli says. The market for server vendors is starting to widen away from the traditional vendors. When companies can’t get the customized products they want from traditional players like HP and Dell, they’re increasingly turning to Taiwanese ODM companies like Quanta and Wistron to build hardware just the way they want it.

If the name seems familiar, then perhaps you remember something of the episode resulting in Roehm’s acrimonious departure from Wal-Mart. The retailer hired her in 2006 in an attempt to bring its brand image into the 21st century and make Wal-Mart an acceptable choice for higher-end consumers.

A lengthy Wall Street Journal profile that year ran through the highlights of Roehm’s pre-Wal-Mart career: Racy double-entendre-laden ads for the Dodge Durango; a campaign with the tagline “That thing got a Hemi?” promoting Chrysler’s muscular engine. In 2004, she hatched an idea for something called the Lingerie Bowl, a pay-per-view event, tied to that year’s Super Bowl, which was to feature scantily clad women playing football. Car dealers and conservative groups complained, and Chrysler withdrew its sponsorship. Early successes at Wal-Mart included a 2006 TV campaign that poked fun at electronics retailer Best Buy.

However, Wal-Mart fired Roehm at the end of 2006 over accusations that she carried on a romantic relationship with a subordinate, Sean Womack. Wal-Mart also accused her, in a court filing, of using company-paid travel to conduct the affair. Roehm was also accused of accepting gifts from executives of an ad agency she ultimately selected, which Wal-Mart said violated company policy.

What followed was a full-blown ad-industry scandal. Womack’s wife turned over emails between Roehm and Womack, more or less proving the affair. Roehm sued Wal-Mart in 2007, accusing then-CEO Lee Scott and other senior executives of accepting gifts of travel and concert tickets from suppliers, and benefiting from preferential prices on items like boats from the Minnesota billionaire Irwin Jacobs. It only got uglier, until a judge dismissed her suit; the lawsuits appear to have ended.

Roehm doesn’t seem to have much history working on campaigns for business-to-business products of the kind that SAP produces. Even so, given her reputation for trying to shake things up with sleepy brands, it will be interesting to see what she does with SAP.

SAP is definitely on the move. Two months ago, it spent $3.4 billion to acquire SuccessFactors, a cloud-based maker of human resources software. That deal was only the latest in a string of deals by traditional software companies to roll up cloud-based outfits. SAP is also making noises about its own cloud, and will probably want to spend lavishly to market its Business ByDesign and HANA products this year, which SAP’s co-CEO Bill McDermott discussed last year with AllThingsD. That’s going to require some new marketing messages that will probably be like nothing the company has ever done before. It will be fun to see how it evolves.

The new forecast calls for companies and governments to spend a combined $3.8 trillion on information technology, which would amount to growth of 3.7 percent from 2011. The previous forecast had called for growth of 4.6 percent.

For perspective, the difference on a dollar basis is about $100 billion, which is certainly real money, but when you consider the various puts and takes affecting the projected spend, it makes a certain amount of sense.

Gartner says that all four of the major technology sectors it tracks — computing hardware, enterprise software, IT services, and telecom equipment and services — will see their growth rates slow this year.

You can probably guess why: The uncertain global economy, the euro zone sovereign debt crisis and the disruptions on the hardware supply chain from last year’s flooding in Thailand on hard-drive production have all teamed up to perform a triple whammy on the tech sector. The Thailand problem will probably last until well into 2013, Gartner’s Richard Gordon says in a statement, echoing what Seagate CEO Steve Luczo told AllThingsD in an interview in November.

Telecom equipment spending will probably suffer the least, Gartner says. Sales in that sector will grow by nearly 7 percent to $475 billion, followed by the enterprise software market, which will grow by 6.4 percent to $285 billion. The chart at the right, which I screengrabbed from Gartner’s handout, breaks down the revised outlook by each sector versus what the previous growth outlook had been.

Gartner also trimmed its average annual growth projection for IT spending through 2015. It now expects spending to grow by about 5 percent on average, down only slightly from 5.4 percent, but in the wider scope of a few trillion dollars, a fractional change still amounts to hundreds of billions of dollars.

Of the companies in Marshall’s coverage universe, only Apple, IBM and Dell had positive returns and saw their shares rise by an average of 20 percent. By contrast, the three biggest decliners were Hewlett-Packard, Juniper and NetApp. (For the record, the others Marshall covers are Brocade, EMC, VMware, Cisco Systems and F5 Networks.)

One thing the advancers had that the decliners didn’t? Conservative guidance. “The importance of conservative guidance practices was underscored as investors had little tolerance for companies that could not execute on stated growth targets,” Marshall writes. HP, NetApp and Juniper all set out aggressive earnings goals that proved too optimistic. Per-share earnings estimates for the coming year among those three were revised downward by an average of 15 percent.

By comparison, Apple, IBM and Dell set lower barriers and ended up having positive earnings surprises, and have moved up their forward earnings estimates by about 17 percent. “Setting conservative targets will again remain critical in 2012,” Marshall writes.

So what’s going to set the tone for tech stocks in 2012? A lot of the same things that made 2011 so difficult. Sovereign debt concerns in Europe, coupled with governments around the world implementing austerity measures to help get their budgets back on track, will hammer IT spending at companies that sell to governments.

That doesn’t mean there won’t be positive trends to look for. Certain megatrends in computing will sail on, despite the rough economic waters. “Cloud computing and mobile internet remain firmly in place and can drive outperformance for companies positively exposed,” Marshall says in his note.

The growth in mobile clients like smartphones and tablets will spur ever more rich and complex computing environments in the cloud, meaning more and better data centers packing more computing power into the same or smaller footprint. Marshall mentions microservers, which brings to mind HP’s Project Moonshot, which aims to create dense racks of small servers, as an important trend to watch. “We think many data centers could look to microserver solutions that deliver thousands of cores in a rack and order of magnitude improvements in performance/power,” writes Marshall. These microservers, he says, could be powered by both x86 chips from Intel or Advanced Micro Devices, or by ARM-based chips.

And since there will be more servers — all of them virtualized, allowing one single server to act like dozens or even hundreds of servers, plus increased demands for storage and video — they will require higher-performing connections. That’s going to push companies building data centers to adopt Ethernet fabrics. On top of that, more companies build servers that support faster 10 gigabit Ethernet. Marshall argues that these Ethernet fabrics could constitute as much as one-third of the $6 billion market for data center switching within three years.

Then there’s big data. With more information than they know what to do with scattered all over the place, companies are struggling to make sense of it all. Large enterprises will be investing in data integration tools to get a unified view of all their information. “We believe organizations will continue investing in data integration tools which can help link historical and real-time data, and enable more valuable business intelligence and predictive analytics,” Marshall writes, adding that the market is worth about $2 billion today, but is in the “early innings of a growth cycle.”

(Image courtesy of chainsawpanda)

Aneel Bhusri

Allen is said to have advised Workday on its recent funding round, which closed in October. As exclusively reported by AllThingsD at the time, Workday raised $85 million at an implied valuation of $2 billion. The Series F was led by T. Rowe Price, Morgan Stanley Investment Management, Janus and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos. Bloomberg also says that Michael Dell’s personal investment vehicle, MSD ventures, was in on that funding round, which grew to $100 million since the closing.

Previous investors include Dave Duffield and Greylock Partners, who are in for $90 million across four rounds; and New Enterprise Associates, which joined a $75 million Series E round in 2009.

Apparently encouraged by the successful IPO of Jive Software earlier this month, and the performance of its shares, which are up nicely since the debut, Workday now appears poised go through with the IPO that CEO Aneel Bhusri (pictured) hinted in October would take place during the second half of 2012.

And there’s no question that Workday is in a hot space. SAP’s $3.4 billion acquisition of SuccessFactors last month, plus Salesforce.com’s deal for Rypple last week, attest to the urgency with which larger companies want to be in the HR software business.

Think about it: Every company — of any size — needs to keep track of its people, their salaries, performance-review information and so on. And why bother with software that runs on the local machines, when the cloud is so much more efficient?

Bhusri was a senior executive and co-chairman of PeopleSoft’s board, and was on hand for that company’s hostile takeover by Oracle. After losing that battle, he and co-founder Dave Duffield concluded that the next battlefield for enterprise software would be in the cloud.

Workday’s average customer has between 10,000 and 15,000 employees. Among its 250-odd customers, the biggest is Flextronics, the huge electronics manufacturing company, which has 200,000 employees. Others include Time Warner, Thomson Reuters, Chiquita Brands and, perhaps unsurprisingly, Salesforce.com. Workday has some two million employees in its system.

And while there’s no S-1 filing with the US Securities and Exchange Commission to peruse yet, the IPO watch on Workday officially begins now.

It’s not the only one: Several enterprise software and hardware players are falling right along with Oracle. Salesforce.com, whose primary customer relationship management software rivals Oracle’s, has fallen more than $8, or more than 8 percent. Oracle’s primary software rival, SAP, is down by more than $3, or more than 5 percent. IBM has fallen $6.73, or more than 3 percent. Hewlett-Packard is down 50 cents, or nearly 2 percent. Dell is down 40 cents, or more than 2 percent. Microsoft is falling, too, but not as much.

It looks a lot like what Cannaccord Genuity analyst Richard David predicted in a note to clients this morning. Oracle is something of a bellwether for software company and corporate IT stocks in general. A lot of the problems that sapped Oracle’s results this quarter, David wrote, are specific to Oracle. But in the minds of investors it doesn’t matter:

“Much of the miss was company specific, but it won’t matter this morning. Investors are likely to use this miss as a reason to pound software on Wednesday. We believe Oracle’s miss, combined with Red Hat’s heavily punished but modest scuffle on Tuesday, will first hit infrastructure stocks like VMWare, Citrix Sysems and then for good measure high fliers like Salesforce.com. Our view is more nuanced; Oracle missed because some buyers waited for a new hardware upgrade, and on the software front the firm is behind the curve in cloud applications. We expect Oracle to catch up, but it will be through some R&D and a lot of M&A. We would “back up the truck” on Salesforce if traders knock that stock down because cloud software companies are very likely to gain significant market share from non-cloud vendors.”

Davis cut his rating on Oracle to “Hold” from “Buy,” arguing that the shares will “trade sideways for the next two to three quarters.” Even after an expected “dead cat bounce” — a quick price recovery after a significant fall — Oracle will have some work to do. “Oracle will have to rebuild confidence that the firm is not is not headed to Microsoft’s valuation level over the next few years. Therefore, we can no longer rate Oracle a Buy.”

Not everyone was quite so negative. FBR analyst David Hilal, in a note to clients this morning, lowered his estimates on Oracle’s sales and profits for fiscal 2012. He now expects Oracle to report per-share profits of $2.36, down from $2.44, and cut his sales estimate to $37.7 billion from $39 billion. He also lowered his target to $34 from $38. Even so, he’s still bullish generally, albeit with lower expectations. “The macro debate will now focus on whether IT spending is finally coming under pressure due to broader economic concerns,” Hilal wrote. “While IT spending is not immune to such macro factors, we are not forecasting a material slowdown as we believe enterprises have already been cautious regarding their spending. However, some modest pullback should be expected, particularly post a seasonally strong end to the year.”

BMO Capital analyst Karl Keirstead didn’t agree with Hilal on that point. “Given some weak recent data points from Red Hat, Salesforce.com, Intel and Accenture, we conclude that the macro IT spending backdrop in fact weakened and that the miss was not related to Oracle execution or share losses,” he wrote in a note to clients this morning. “We assumed that Oracle could manage through this tightness and we were obviously wrong.” He lowered his price target to $32 from $38 but maintained a “buy” rating.

Other analysts downgraded Oracle, too. Societé Generale analyst Richard Nguyen cut it to “Hold” from “Buy.” CLSA slashed Oracle shares to “underperform” from “buy,” and lowered its price target to $30 from $36. Deutsche Bank analyst Thomas Ernst lowered his target price to $29 from $33. It’s just one of those days.

So what happened? A few things, as Oracle execs tried to explain on a conference call.

• The currency effect: As President and CFO Safra Catz explained, what had been a 1 percent tailwind for currency effects turned into a 2 percent headwind. With all the violent swings in the value of currencies around the world as compared to the U.S. dollar, Oracle suffered a negative effect that pinched revenue.

• Deals didn’t close during the quarter: Catz said that in the final days and weeks of the quarter, some customers added an extra layer of executive approval to close deals to buy Oracle stuff. That meant that some deals Oracle had expected to close before the quarter’s end moved into the next quarter. Catz said that Oracle has taken steps to better manage deal flow to take this into account. It is consistent, however, with recent statements from other enterprise IT vendors, like IBM and NetApp.
• Transitions: Oracle’s SPARC server business just switched to a new chip called the T4, which was unveiled late in the quarter. The machines require a total upgrade, and that means a lot of testing with existing applications, which can slow down deals for the new machines, while at the same time sapping demand for the prior generation of products. That had a lot to do with hardware sales dropping by 14 percent year over year to $953 million. As Catz put it: “We saw good early demand for the new SPARC SuperCluster, but only released the product for general availability at the very end of the quarter, allowing us to ship only a couple.”

Catz also predicted that hardware sales will decline as much as 14 percent this quarter, although CEO Larry Ellison was bullish on its growth prospects later this year. New software license revenue, a key metric gauging software sales, is expected to grow in a range of 2 percent to 12 percent. Total sales are expected to grow in the range of 3 percent to 7 percent, and per-share earnings are expected to come in between 56 and 59 cents, which is in line with the consensus of analysts.

There were a few things that went right. Ellison did what he usually does on a conference call, and crowed about examples where Oracle is beating a competitor. This time, the targets were IBM, Cisco Systems and SAP, but not his usual punching bag, Hewlett-Packard. Oracle won several competitive deals from Big Blue and Cisco, as well, with customers as varied as Australia’s University of Melbourne, the U.S. Food and Drug Administration and the Hyundai Kia Motor Company.

Ellison also hinted that Apple is a big Oracle customer. He mentioned a “a very large American smartphone manufacturer” that had bought more than 30 Oracle Exadata systems as it built out its cloud. Unless I’m missing something, there’s really only one company that fits that description, and that’s Apple. Its use of Oracle gear within the mix at its North Carolina data centers has been speculated about before, but never confirmed by Apple directly. (Big surprise, that.)

The company reported a profit of 54 cents per share on $8.8 billion. The results fell short of the consensus view that Oracle would report sales of $9.23 billion and a per-share profit of 57 cents. Oracle shares, which had risen by 56 cents, or 2 percent, during the regular trading session, to close at $29.17, fell sharply in after-hours trading. As of 4:15 pm ET, Oracle shares were trading down $1.72, or 6 percent, on the news.

In the plus column, Oracle said its operating margin on a non-GAAP basis improved to 45 percent, and that it expects those margins to keep rising. Operating cash flow grew by 45 percent, as well, to $13.1 billion.

The company boosted its salesforce by 1,700 during the first half of the year, in an effort to boost sales of its Enterprise Resource Planning and Customer Relationship Management software products. Co-President Mark Hurd said the additional sales personnel should help sales improve in the second half of the fiscal year. (The quarter was Oracle’s fiscal second.)

The company said its board of directors approved a $5 billion share buyback and a 6-cent-per-share dividend.

CEO Larry Ellison said in a statement that sales of so-called engineered systems — essentially hardware that contains a lot of exclusive Oracle technology — surged versus the year ago period. Sales of Exadata database hardware and Exalogic servers both grew by 100 percent, he said. He also said that Oracle shipped its first SPARC SuperCluster during the quarter, and expects to commence deliveries of Exalytics Business Intelligence machines this quarter.

Oracle’s statement is below. I’ll be adding more to this post as I go through the press release, and will call out some highlights. The company is hosting a conference call shortly.

(The pitch-perfect image of the Team Oracle plane doing a dive during San Francisco’s Fleet Week was taken by Ingrid Taylar for About.com.)

Oracle Reports Q2 GAAP EPS Up 17% to 43 Cents; Q2 Non-GAAP EPS Up 6% to 54 Cents

Trailing Twelve Month Operating Cash Flow Up 45% to $13.1 Billion

REDWOOD SHORES, CA–(Marketwire -12/20/11)- Oracle Corporation (NASDAQ: ORCL – News) today announced fiscal 2012 Q2 GAAP and non-GAAP total revenues were up 2% to $8.8 billion. Both GAAP and non-GAAP new software license revenues were up 2% to $2.0 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 9% to $4.0 billion. Both GAAP and non-GAAP hardware systems products revenues were down 14% to $953 million. GAAP operating income was up 12% to $3.1 billion, and GAAP operating margin was 35%. Non-GAAP operating income was up 3% to $3.9 billion, and non-GAAP operating margin was 45%. GAAP net income was up 17% to $2.2 billion, while non-GAAP net income was up 6% to $2.8 billion. GAAP earnings per share were $0.43, up 17% compared to last year while non-GAAP earnings per share were up 6% to $0.54. GAAP operating cash flow on a trailing twelve-month basis was $13.1 billion.

“Non-GAAP operating margins increased to 45% in Q2,” said Oracle President and CFO, Safra Catz, “and we expect those margins to keep growing. Operating cash flow over the last twelve months grew to $13.1 billion; that’s up a remarkable 45% compared to the preceding twelve month period.”

“We have expanded our worldwide sales capacity by adding over 1,700 sales professionals in the first half of this fiscal year,” said Oracle President, Mark Hurd. “We believe that this increase in our field organization combined with innovative new products like Fusion Cloud ERP and Cloud CRM will enable solid organic growth in the second half of this year.”

“Sales of our engineered systems accelerated in Q2,” said Oracle CEO, Larry Ellison. “Exadata growth was well over 100% compared to last year, and Exalogic grew more than 100% on a sequential basis. We shipped our first SPARC SuperCluster in Q2 and expect to begin deliveries of our Exalytics system and the Oracle Big Data Appliance in Q3.”

Oracle announced that its Board of Directors authorized the repurchase of up to an additional $5.0 billion of common stock under its existing share repurchase program in future quarters.

The Board of Directors also declared a quarterly cash dividend of $0.06 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 11, 2012, with a payment date of February 1, 2012.

Despite a wobbly economy, especially in Europe, IT spending seems to be holding steady. Brian Schwartz, an analyst with ThinkEquity, checked in with 16 IT industry contacts and asked about their spending plans for the coming year. The answers, he says, point to positive results in Oracle’s report today. “Contacts surveyed, on average, finished 1 percent above their plans in Q2 and estimate their customers’ overall IT budgets will grow about 3 percent in 2012,” Schwartz wrote in a note to clients on Dec. 15.

Also in Oracle’s favor: The priority in IT spending is shifting away from things that generate revenue and toward things that help control costs. “This transition could provide a nice tailwind for Oracle’s many cost-savings products around data-center consolidation,” Schwartz writes.

Of the 16 people surveyed, Schwartz says, seven were positive, five were neutral and four were negative. Those in the positive column said they expect their IT budgets to grow incrementally in 2012, and they seemed bullish on Oracle’s database and middleware offerings, which help reduce the overall footprint of their data centers. Those in the negative column cited uncertainty about Europe and the financial services sector. Some financial customers are cutting their spending on things like outside consultants, and sales cycles for certain products are growing longer.

The consensus view of Wall Street analysts calls for Oracle to report sales of $9.23 billion and a per-share profit of 57 cents. Schwartz rates Oracle a Buy with a $36 price target, which would amount to a 26 percent improvement over Monday’s closing price of $28.61. Oracle shares have fallen by a little less than 9 percent since the end of 2010.

Emptoris is based in Burlington, Mass., and its customers include American Express, ADP, Kraft Foods and Samsung America.

IBM is describing the deal as the latest move to fill out its “smarter commerce” initiative. And if you follow IBM, you know that making something “smarter” — whether it’s commerce or a city or the entire planet — generally means throwing some computing power and analytics up against a classic, complicated problem, which frankly, supply chains always are.

When you start looking at the patterns of what companies buy in the normal course of doing business — how often and how much not having some critical component or material can disrupt production — you start to see inefficiencies that cost time and money. Eliminate those inefficiencies, the thinking goes, and you start shaving down those costs, and start running the business in a more efficient manner. Usually, the saved costs go straight to the bottom line. That’s something that any CEO or CFO can get behind, and IBM says that doing this sort of thing is a $20 billion global market opportunity on software purchases alone.

IBM’s press release quotes Craig Hayman (pictured above), its general manager of industry solutions, who talked to AllThingsD in July about how IBM is helping companies manage their marketing. Hayman says that corporate procurement departments are increasingly being asked to show how they deliver value to a company. Emptoris will fit alongside IBM’s 2010 acquisition of Sterling Commerce.

Financial terms of the deal haven’t been disclosed, which means it’s a relatively small deal for Big Blue. But it’s also the second deal it has done this month in the smarter-commerce area. Last week, IBM spent $440 million to grab DemandTec, a software outfit that specializes in analyzing buyer behavior.

By 11:15 am ET, IBM shares fell on the news by 99 cents, or less than 1 percent, to $187.73. The shares have been on a steady climb all year, and as of yesterday’s close were up nearly 29 percent since the start of 2011.

At that price, Jive will debut with a market capitalization of nearly $700 million, and has raised about $161 million.

The offering will amount to a nice payout for Jive’s investors and shareholders. Based on the reported share holdings in Jive’s S-1 filing with the SEC, here’s how some of them are making out — assuming the share price stays at $12:

• Sequoia Capital: 16.95 million shares, amounting to more than one-third of Jive’s equity, worth $203.4 million.

• Kleiner Perkins: 6.7 million shares, worth $80 million.
• Bill Lynch, Matthew Tucker: Jive’s co-founders own 7.1 million shares each, amounting to combined equity of nearly 32 percent, worth $85 million apiece.
• CEO Tony Zingale, the former CEO of Mercury Interactive who oversaw its sale to Hewlett-Packard, has 3.6 million shares, worth $43 million.
• John McCracken, Jive’s senior VP of worldwide sales, has 784,000 shares, worth $9.4 million.
• CFO Bryan J. LeBlanc has 694,000 shares, worth $8.3 million.
• Bill Lanfri, a Jive director, former CEO of Big Bear Networks (a Sequoia investment), and a founding investor in RedBack Networks, has 581,000 shares, worth $7 million.
• Robert F. Brown, Jive’s senior VP of client services, has 434,000, worth $5.2 million.
• Brian J. Roddy, senior VP of engineering, has 429,000 shares, worth $5.1 million.

Last month, the company estimated it will sell 11.7 million shares in a price range of $8 to $10. Lead underwriters on the deal are Morgan Stanley and Goldman Sachs with Citigroup, UBS, BMO Capital Markets and Wells Fargo also participating. At $10 a share, Jive would be valued at $573 million.

The company’s executives have been on a road show in recent weeks. You can see CEO Tony Zingale give a 32-minute talk complete with slides on the company on the Web site Retail Roadshow.

The IPO will mark a nice exit for venture capital investors Sequoia Capital and Kleiner Perkins who have backed Jive to the tune of $57 million in three rounds, the largest of which came in August of 2010.

The deal also takes place against the backdrop of a sudden surge in interest in enterprise software companies, particularly those that run in the cloud. SAP snapped up the cloud-based HR software player SuccessFactors for $3.4 billion earlier this month, while in October Oracle acquired RightNow for $1.4 billion.

Along with Taleo, Jive will quickly become part of the conversation concerning cloud-based acquisition targets.

While initially Jive’s software was delivered as an on-premise, behind-the-firewall product, it has in recent months been boosting its cloud-based business. In its original S1 filing, it said that as of the six months ended in June, it derived 59 percent of its sales from cloud-based software.

Ahead of the dinner, Anderson stopped by my office to let me have a peek at his 10 predictions, and we talked them over a bit. All 10 are below, along with some comments from Anderson that emerged from our conversation.

Before diving into the predictions, Anderson tells me there is a grand theme that unifies them all: “Integrating everything.”

What does that mean? “It means a whole lot of stuff that needs to be integrated. We don’t need anything new at all. There’s so much work that needs to be done with the existing tool sets. Steve Jobs didn’t really invent anything at all. But he was great at integrating things into a product. There’s a lot more of that work to do. We have to do it in the phone world and the TV world and the health care world. We have lots of devices and lots of chips and lots of operating systems and lots of content. The bigger question is, how do human beings use it all efficiently?”

As an example, he cites the collaboration between Nuance, the speech software company, and IBM, bringing the Watson computer of “Jeopardy” fame into the area of health care. “For the first time, the idea of evidence-based medicine won’t just be in a magazine article,” Anderson says. “A doctor will be able to pick up his phone and describe four symptoms, and find out what the likely diagnosis is, what the indications are. It’s fantastic.”

So here are those 10 predictions, with additional comments from Anderson:

1. TV becomes the new center of gravity in the tech universe. All the other devices find their niches in the TV galaxy. Microsoft’s attempt to integrate Kinect into TV is a strong if qualified success. Smart phone-TV integration software becomes a new category. Pad-TV integration becomes common.

“Apple will hustle to launch the next version of Apple TV, and it will be a roaring success and be seen as Tim Cook’s first great product success. But what it really will be is Steve’s last product.”

2. 2012 will see tectonic shifts in phone markets. “Nokia will fail to come back, which is pretty clear to everyone except the people in Finland.” Samsung, Anderson says, will retain its spot as the new global leader in mobile phones by volume, and will keep this crown despite the debut of Microsoft’s Windows Phone 7.

Meanwhile, Anderson says, Google will lose control over the Android operating system, mainly because unlicensed versions of Android will multiply in type and in installed base, especially in Asian countries. “It’s already a balkanized environment. Now Google loses control of the technology entirely. China is already running an unlicensed version of Android, and I think there will be more of that.”

Finally, the smartphone will finally emerge as the dominant category of wireless phone. “Why would you have anything else? And why would sellers of content and services want you to?” he says. “It doesn’t matter if you’re in a rich country or a poor country. This stuff is cheap.”

3. Clouds are for consumers, and for start-ups. Even as a large number of big companies move pilot projects onto external clouds, it will become clear that the real trend is for enterprise to stay away from clouds in all key areas, for reasons of both security and reliability.

“The cloud guys hate this because they want to sell to enterprises,” Anderson says. “But the security issues are becoming really intense. If you’re a CIO, it’s a terrible environment, and you’re a target, for sure, especially if you’re a company with a lot of intellectual property. I’m not implying that things like SAAS (software as a service) aren’t a big trend. But no one is going to put their valuable IP on the cloud.”

4. Security splits the tech world in two, finally getting attention from CEOs. Companies with real IP start to realize they have to “go big or go home” with their security response, and their spending on protecting their “crown jewels” rises dramatically.

5. Siri stuns the world. Siri, on Apple’s iPhone 4S, has sounded the arrival of Internet personal assistants, and the world will spend this year marveling at what Siri and its rivals can and cannot do — and what they can learn to do.

“I think we’ll see a bunch of these things,” Anderson says. “Siri will get much better. It will learn how you learn. We’ve never seen people have long-term relationships with machines before, but it will be a long-term relationship, and she will remember everything, but make good use of it. She will know you learn better by seeing than hearing, or that it takes three times to tell you something. All those things that you have to program today should be learnable. None of that has been done yet. That creates a real friendship. And I think we’re going to start seeing personal assistants not just for everyday life, but for professions like medicine or car repair. Instead of just having Siri be everything, there will be many Siris for different contexts.”

6. We enter the amazing world of Dave and HAL, as voice recognition comes of age. From hospital to car, mobile to home, Kinect to Siri, exercise to play, work to entertainment, remote control to direct action, from Microsoft to Apple, from Tellme to Nuance — the time has come for computers and humans to talk to each other. With lots of funny stories, big bloopers and amazing breakthroughs, humanity at the end of 2012 will be talking to machines in a normal voice, and it will not seem unusual, nor be the cause of unending frustration.

“The voice-recognition part is almost trivial,” Anderson says. “The important part is context-sensitive understanding. It used to be that all the researchers at Carnegie Mellon used to think that all you needed was more computing horsepower to do better at voice. It turned out that was wrong. It was right for a little while, but the real problem is context. And so, if you can build up that database where you can search it contextually for what to expect, that is where you get all the mileage.”

7. E-readers prosper, but pads continue to dominate what Anderson calls the “carry-along” market. Pads and tablets will come down in price and get closer to prices of e-readers. Meanwhile, Anderson says, Amazon’s Fire will move upmarket and evolve into a full-fledged tablet.

“If you look at the specs on the Fire, it’s a tablet, but it’s hobbled,” Anderson says. “So I think that this is part of the whole strategy: Come in and sell at a low price, and then later unveil a more complete tablet. Apple will stay ahead, though. A lot of people are asking me if Amazon will catch Apple, and the answer is no. The way it’s configured right now, there’s no way the Fire will catch up with the iPad.”

8. The consumption world explodes. Get ready for new devices, new content, new bundles, new connection techniques, new distribution channels, new aggregators, new tablets, new phones, new players, new self-published authors, new garage bands, new consumption models riding on social networks. There is nothing but high energy in the content consumer market. People are now ready to spend subscription money, and the publisher response will be huge. “It’s going to be a huge melee of stuff,” Anderson says. “We’ll invent more stuff to consume, and it will be very hard to figure out who the players are from week to week, and how they’re doing. They may not even know themselves.”

9. Governments and corporations focus on intellectual property as though it were their most prized asset. It is. This new global understanding leads to a reevaluation regarding giving critical IP away for nothing versus protecting it. The age of what Anderson calls “IP naïveté” is over, and the question of proper IP valuation is here.

What is IP naïveté? “When Jeff Immelt stood on the steps of the White House the day after he was named jobs czar, and handed the plans for GE’s most important jet-engine project to Hu Jintao in order to get the permission to be allowed to bid on maybe selling engines to China — that’s IP naïveté,” Anderson says. “Thinking that’s not going to come back and show up for sale in Houston from some Chinese company in about six months is IP naïveté.”

During 2012, he says, companies and countries will start valuing their intellectual property not for its replacement value, but for figures that are magnitudes larger. State-sponsored IP theft will shift from being considered a nuisance and more along the lines of an act of aggression.

10. Amazon gets it all. Between outdoing Wal-Mart online, to beating the booksellers and delivering groceries, and making new inroads in video streaming, Amazon will prove that one company can indeed have it all. Strong Kindle and Fire sales will only be icing on the cake.

Taleo’s CEO, Mike Gregoire, has been in this position before. As executive vice president of Global Services for PeopleSoft, he lived through Oracle’s hostile acquisition of that company. In an interview with AllThingsD, he didn’t comment directly on the speculation that Oracle might make a bid — Oracle hasn’t hasn’t said anything on the subject, either — but it was clear that he didn’t exactly seem to relish the thought, either. Having run $2.3 billion of PeopleSoft’s $2.7 billion in revenue, he was with that company “until the bitter end,” he told me.

After a stint as an angel investor and sitting on the boards of a few companies, Gregoire decided he was “more of an operational guy.” He joined Taleo and took it public in 2005, and has been at its helm since then. Taleo was at that time the second cloud-based software company to go public after Salesforce.com. It was so early for software-as-a-service (SAAS) companies, where customers pay a subscription fee to use the application, that when he approached banks for some financing, upon hearing the word “subscription” they would initially compare it to a magazine. Eventually they understood, and Gregoire got his loan. Now some of those banks are his customers.

Cloud-based enterprise software companies are suddenly hot acquisition targets. Aside from the SAP-SuccessFactors deal, Oracle acquired RightNow in October. As a growing cloud-based rival to SuccessFactors, with a protein-rich customer base, a solid operating model and an affordable market capitalization of about $1.6 billion, Taleo’s shares have shot up on speculation that it could be next.

On Dec. 2, the day before the SuccessFactors deal, Taleo shares closed at $32.96. On Dec. 5, the first trading day after the deal, Taleo rose almost 20 percent to $39.50. The move by SAP — long a vendor of traditional on-premise business software — to embrace the cloud-based or SAAS model is an important acknowledgement that the business of selling business software is fundamentally changing, Gregoire says. Indeed, it’s a fact that SAP’s co-CEO Bill McDermott acknowledged even before bidding on SuccessFactors.

And it’s hard to argue that Taleo (pronounced Ta-LAY-oh) isn’t making an impressive showing. The company has been growing its sales at between 17 and 20 percent since since 2008, and it’s on track to hit $325 million in sales this year, up from $237 million last year. It has 5,000 customers, including 180 of the companies on the S&P 500, and its product is available in 38 languages.

Naturally, my first question for Gregoire was about his thoughts on the SuccessFactors deal.

AllThingsD: Mike, it has been a busy few days since the SAP-SuccessFactors deal was announced. What did you think of the deal? And what, if anything, does it mean for Taleo?

Gregoire: I think it started a few weeks earlier, with the Oracle RightNow deal. It’s a confirmation that the on-demand model is moving into the next phase of its adoption. We’ve got 5,000 customers. We’ve been the No. 1 on-demand player in the enterprise. No one has as many Fortune 100 customers as we do. We drive the second-largest number of transactions volume of any on-demand player. It kind of felt like we had been pushing this rope, trying to get people ready for that next phase of adoption. So Oracle and SAP are acknowledging that the on-premise solution is running out of gas, and they need to augment that solution with some off-premise cloud solutions. Second, it’s important that SAP has recognized that talent management is extraordinarily important, and it complements a back-end Enterprise Resource Planning (ERP) system. Taking care of people helps your company grow, and without it, your company is at a competitive disadvantage.

A lot of people look at the the phrase “talent management” and think it’s kind of specious — or even boring — software that only the human resources office needs. What does it mean?

If you want to talk about an application that moves the needle for business performance, there’s nothing better. The No. 1 expense in businesses is people. We see the news about the unemployment rates, and then we see that companies can’t hit their productivity goals because they don’t have the right people in the right jobs. Its absolutely crazy. That’s the problem we solve. Talent management is about getting the right people into your company, having them work on the right things, because you’ve got performance goals, measuring those goals, tying that to pay-for-performance and compensation. And, by the way, the chances that person has the right skills at the right time is about zero, so you want to tie those goals to a learning management system, and making that happen in real time, and then providing intelligence about the whole ecosystem of employees. That moves the needle with respect to business performance.

What’s a classic example of this software in action?

I’ll talk about SunGard, which is a customer of ours. They use an Oracle ERP system, and they use our learning management systems. Let’s say you’re a SunGard sales rep and you just got promoted. The day that your promotion goes through in the ERP system, it kicks off a transaction in our learning system that checks your history to see what courses you’ve taken and whether you’ve got all the certifications you need. And then it automatically builds out the courses you need to take to be successful in your new job. We also do succession planning. And the days when you’re only going to consider people inside your company are over. You’ve got to think broader than that. United Airlines, which is a customer, when they think of succession planning, they’re not only thinking about the 200 high-potential individuals within the company. They’re talking to people in the industry so they can take a look at the people inside and outside the company and consider different scenarios. Our application is graphical, so you can drag people around in a visual tree and see what each scenario looks like. And then you can save them for later, so that if someone gets promoted, fired, or leaves the company for another job, you’ll know what to do, should any of those three things happen. Most people do this sort of thing in their heads.

How do you think Taleo stands up against SuccessFactors competitively?

Going forward, we’ll have to see how that works out. [With] due respect to what I’ve read about the deal in the press, I don’t think the integration with SAP is going to be a walk in the park. There’s at least seven platforms in SuccessFactors. And in this deal, you have two companies who have struggled to do SAAS at scale. SAP doesn’t have a very good track record executing on SAAS. They spent a lot of money building Business ByDesign. Rumor has it that SAP spent as much as $500 million building it. Their track record has been very marginal. The same is true with SuccessFactors. They’ve done a good job with one product that’s on an old platform for between 5,000 and 10,000 employees. They don’t have a good track record in the upper end of the enterprise, and they haven’t been able to get revenue from outside of their core, which is performance management. They went and bought a company in learning management. We’re dominant in recruiting; they’ve been trying to build a recruiting engine for five years. I don’t know that they have any significant reference customers on that yet, but they should have some soon, because they’ve been at it for so long.

So why did SAP buy SuccessFactors, then? Was it for the customer base?

SuccessFactors has a pretty small customer base. We’ll know more after they publish the 10-Ks and 10-Qs, so we’ll see more of where the synergies really are. But the synergies that have been reported is they want to be able to take the SAP technology and repurpose it into the SuccessFactors stack, which sounds expensive and time-consuming, and then take that stack and combine it with Business ByDesign and compete with Workday. We work pretty closely with Workday, and often go in with them shoulder to shoulder on deals when a customer needs recruiting and learning. And they use our recruiting products.

So, let’s handle this one piece of business. I’ve seen no fewer than five analyst reports saying you’re going to get taken out by Oracle. Have you been contacted by Oracle, or anyone else, about a possible acquisition?

We don’t comment on that kind of speculation. But a first-year MBA student could connect those dots. We’re positioned to be the only independent full-suite SAAS player in the market right now, and that’s a good place to be. How everyone reacts to that, I can’t control. But we’re on track to do $325 million in revenue this year, and we’re growing at about 20 percent per year. We have 12 percent operating margins. Who else has that? We’ve not only figured out how to do SAAS at scale, but we’ve done it profitably. And we continue to innovate. That’s where we want to be.

What are your priorities for 2012?

Three things. Selling back into our customer base. Most of them came to us for our recruiting heritage. If you take a look at last quarter alone, 36 percent of our net new bookings were in products other than recruiting; we’ve been reporting that number every quarter. So there’s a big push to sell our other products into our existing customer base. Second is geographical expansion. We bought a company in France that effectively doubled the size of our European salesforce. Despite what you hear going on Europe, they are not going to spend as much on technology in 2012 and 2013. If they are going to spend any money, it’s not going to be on upgrades of perpetual software licenses. I think they will spend it on SAAS, and I think Europe is generally way behind on SAAS. If I were to tell you our biggest deal last quarter was going to be a seven-figure deal with a Swiss bank, you would have said I was crazy, and that it would never happen. But it did. The reason it happened is that SAAS is orders of magnitude cheaper than paying maintenance fees on perpetual software licenses. The same thing happened with Société Générale, the French bank, which stopped an upgrade of either Oracle or SAP midstream, and they went with us. There is definitely room for SAAS in Europe, and there will be more room for SAAS in Europe in 2012; I think we’ll be a net beneficiary of that. Third is innovation, both organic and inorganic. We’ve been acquisitive, and every transaction we’ve done has been accretive and has worked out well. We’re good at either buying technology or customer bases and integrating them very quickly. Organically, we’ll be doing a lot of work on mobile and social features.

Today, Cisco finally laid out a cohesive strategy to become a significant player in the cloud business. It announced an offering called CloudVerse that combines three big elements — its Unified Data Center, Cloud Intelligent Network and Cloud Applications — into a big portfolio aimed at companies building out their data centers.

The idea is basically this: If you want to build a cloud, either to resell cloud services of some kind or for your company’s own internal operations, Cisco wants to talk to you. Under the CloudVerse tent are a bunch of offerings including computing, networking, collaboration and software for automating and managing it all.

Cisco named a handful of companies who are already CloudVerse customers, and a few will catch your eye, because they’re big. One is Terremark, the Web-hosting and cloud-services outfit that telecom giant Verizon acquired earlier this year. Others include Telecom Italia, Telefonica Spain and Fujitsu.

Naturally, Cisco is hoping to use its position as the supplier of choice for networking gear as a springboard into selling more stuff inside the data center, and it already has key relationships with many a corporate CIO. A key part of its go-to-market strategy will be convincing those CIOs that it has something unique to offer.

Here’s one such thing: The Network Positioning System and Cloud-to-Cloud connected. Imagine you have a sprawling set of far-flung data centers around the globe. When one center gets starts to get close to reaching its capacity load — maybe it’s Cyber Monday or something — Cisco’s NPS technology allows the routers in one data center to start automatically looking around for capacity elsewhere, to keep things humming along.

There’s a lot more detail to it, but it’s worth pointing out that, as a percentage of Cisco’s business, the cloud business isn’t huge. On an earnings conference call with analysts last month, CEO John Chambers said that the Unified Computing System that forms the backbone of its server business had recorded 116 percent revenue growth year over year; even with that, it’s on run-rate to being a $1 billion annualized business. If it hits that mark in Cisco’s fiscal year 2012, which ends in July, it will amount to about 2 percent of estimated annual sales.

But Cisco expects the cloud business opportunity to grow like crazy. Last week, it issued something called the Cisco Cloud Index, which estimates that more than half of all computing workloads will be running in data centers by 2014, and that the daily traffic conducted on cloud services of various types will amount to 1.6 zettabytes per year. My math may be off a bit, but compare it to the scale of your average hard drive — a zettabyte amounts to a billion terabytes, or a trillion gigabytes. Cisco describes it as enough data to amount to four days of high-quality video streaming for every person on Earth.

It’s a serious opportunity, no doubt. The question is whether or not Cisco can exploit it in a manner that moves the needle. Doing so is an important part of the strategy that Chambers set forth as part of the epic restructuring that has been going on at Cisco since last year. Investors seem to like what they see, as Cisco shares are trading at $18.80 today, which is up 41 percent from a recent 52-week low. As turnarounds go, it does look like progress.