Aneel Bhusri

Sources familiar with the company’s plans tell AllThingsD that Workday has chosen the four bankers that will lead it through the IPO process: Morgan Stanley, Goldman Sachs, Allen & Company and JPMorgan Chase & Co. The search for bankers caps a process begun in December.

The company’s IPO path calls for an S-1 filing to be made with the Securities and Exchange Commission by mid-July. After a late summer or early fall road show, its shares would debut between October and December, depending on how favorable market conditions are, sources familiar with the matter tell me.

The process began in earnest after Workday hired its new CFO, Mark Peek, away from VMware, where he was also CFO.

Workday is feeling emboldened in part by the successful offerings of Jive Software and Splunk, both enterprise companies with their hands in the cloud business. Workday itself is a pure cloud software play, specializing in human resources applications, a white-hot area of enterprise that has seen a lot of M&A activity of late.

In December, software concern SAP spent $3.4 billion to acquire SuccessFactors. Then, in February, software giant Oracle spent $1.9 billion to acquire Taleo, in a deal that took place shortly after I interviewed Taleo’s CEO. Even Salesforce got into the act, acquiring the start-up Rypple for an undisclosed amount in December.

Much of that dealmaking came in response to concerns about Workday, especially after its impressive $85 million Series F round of institutional funding at a $2 billion valuation, which AllThingsD reported exclusively in October. A Bloomberg News report said that round was oversubscribed and grew to $100 million when Michael Dell’s MSD Ventures joined.

Investors in that round included several who also took part in institutional rounds in Facebook and Web gaming player Zynga: T. Rowe Price, Morgan Stanley Investment Management, Janus, and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos. William Danoff, the manager of Fidelity’s $80 billion Contrafund, the mutual fund giant’s largest stock-based fund, also participated in that round.

A Workday IPO, which would raise about $500 million, would make for a sweet payday for the company’s earlier investors, which include Dave Duffield and Greylock Partners, who invested $90 million in four rounds, and New Enterprise Associates, which joined a $75 million Series E round in 2009. By my math, Workday’s total capital raised comes to a cool $195 million.

So how’s business? With the company having disclosed $160 million in billings total bookings in 2010, sources familiar with its operations tell me bookings in 2011 exceeded 100 percent growth. That would be above the $320 million in 2011 bookings CEO Aneel Bhusri told me he expected last October.

Workday is essentially the creation of PeopleSoft vets Bhusri and Duffield. They started the company in 2005, not long after losing a pitched battle to resist a $10 billion hostile takeover by Oracle. Bhusri and Duffield concluded that the next battlefield for enterprise software would be in the cloud. They kickstarted Workday using their own money and some funding from Greylock, and brought some PeopleSoft employees with them.

The idea was to re-create PeopleSoft, which makes software that businesses need to run day to day, but to deliver it from the cloud.

And unlike other cloud players that approach smaller companies and work their way up to ever-larger customers, Workday’s customers are already in the big leagues. The average Workday customer — there are 280 — has between 10,000 and 15,000 employees. The biggest is Flextronics, the huge electronics manufacturing company, which has 200,000 employees. Other customers include Time Warner, Thomson Reuters, Chiquita Brands and Salesforce.com. There are Workday records on more than two million employees on its system. All that after only four-plus years of active selling. A second, newer line of financial applications aimed at helping companies more efficiently manage their spending is getting traction, too.

Workday will probably be the biggest among a pending batch of enterprise-oriented IPOs set for summer and fall after the Facebook madness is over. For one, there’s Violin Memory, which I’ve been reporting on quite a bit. And Reuters is reporting that cloud storage and collaboration concern Box is looking like it’s eyeing an IPO in 2013. The bankers are going to be busy.

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.”

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.

Aneel Bhusri

Today, Workday will announce that it has just raised $85 million in new financing, bringing its total amount of capital raised to $250 million. Sources familiar with the terms of the deal tell me that the investments value Workday at $2 billion.

The funding round isn’t coming from traditional venture capital players, but from institutional investors who will want to be shareholders of Workday when it goes public in the second half of next year. The round, which is being described as a Series F, includes T. Rowe Price, Morgan Stanley Investment Management, Janus, and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos.

I’m also told, by sources familiar with the deal, that William Danoff, the manager of Fidelity’s $80 billion Contrafund, the mutual fund giant’s largest stock-based fund, has participated in this funding round. This would be the Contrafund’s third recent investment in a privately held Internet company, the other two being Facebook and Zynga. In fact, it’s the same group of funds that took part in a huge round with social gaming force Zynga in February; in Groupon in January; and which earlier this year bought nearly three million shares of Facebook for $25 each.

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.

Why raise from institutionals and not VCs? “Because Workday is going to go public, and probably before the end of next year,” Bhusri told me. “Rather than do a round that adds an overhang to the existing capital structure, this is a group of investors who will likely buy more in the IPO,” he said. “In some ways, it’s an early debut of an IPO.”

And while there’s no S-1 filing from Workday to peruse just yet, Bhusri told me that Workday is growing plenty fast. Having disclosed $160 million in billings in 2010, Workday, he says, is on track to do twice that — or about $320 million in 2011 — and that it’s close to breaking even. So this round of capital is insurance. With the world economy so out of joint, if no logical window for an IPO emerges in 2012 — a reasonable worry — then Workday won’t be forced, should the need arise, to raise more capital in a difficult market.

So what is Workday, exactly? For the answer, you have to turn the clock back to 2004, when the software giant Oracle made its initial hostile bid to take over PeopleSoft. Bhusri was a senior executive and co-chairman of PeopleSoft’s board. After losing the battle to resist Oracle, he and co-founder Dave Duffield decided that the next battle for enterprise software would be in the cloud. Workday was born within months of their departure from PeopleSoft.

The plan, Bhusri says, was to create the next generation of PeopleSoft’s software, or the next generation of SAP’s Human Resources and Enterprise Resource planning software — essentially, software that businesses need to run day to day. But rather than deliver it in the traditional manner — run it on machines at the customer’s location — it’s all delivered via the cloud. “It’s as if you were going to start over with a clean sheet of paper and design this kind of software all over again,” Bhusri says.

And Workday’s customers aren’t exactly small players. Its 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. Other customers include Time Warner, Thomson Reuters, Chiquita Brands, and perhaps unsurprisingly, Salesforce.com. There are some two million employees on the system. All that after only four years of actively selling the product.

And what Workday sells is a system that tends not to get replaced very often in large companies — perhaps once a decade. That gives the company an advantage when it asks for contract commitments that last three years; most cloud companies offer their services on a pay-as-you-go basis.

Workday’s targets are Bhusri’s old customers who bought PeopleSoft software to run their businesses one product generation back, and also those who run SAP software. So when a new customer signs on it’s usually one or the other being displaced. Other rivals include Lawson, Infor and, occasionally, the payroll giant ADP.

The typical new customer, Bhusri said, is using one of those other platforms and is ready to upgrade. “To upgrade to the newest version, they get a price quote that’s so high they start looking for a better way,” he says. “That’s when they find us.”

And Workday isn’t sitting still with HR software. Its next battle will be in financial planning software that companies rely on to handle money — accounting, expenses, procurement. Workday already has 50 customers running the financial stuff. Once they try Workday’s HR, they like what they see, making for an easy upsell. Others just swap out both the HR and financial parts in one go, Bhusri said. And the competitive targets are the same as well: Oracle and SAP. One wonders if they aren’t just a little worried.

It also got a new round of funding, including an investment from Greylock Partners, that brings its total capital raised so far to $11 million. Also joining Tidemark’s board are Peter Currie, president of Currie Capital; and Phil Wilmington, former co-president of PeopleSoft and the CEO of OutlookSoft. Both have joined Tidemark’s board of directors. Also on the board are Aneel Bhusri, co-CEO at Workday and a Greylock Partner; and Ben Horowitz, partner at Andreessen Horowitz.

Tidemark is building what it calls an Enterprise Performance Management application — all in the cloud — but it is also built from the ground up with mobile applications in mind. I had lunch with CEO Christian Gheorghe last week, and I have to say that what he described to me sounded, at first, a lot like what I’ve heard from lots of other companies wanting to give business leaders useful, up-to-the-minute business information they can act on.

Too often in business intelligence and analytics, projects fail to deliver, Gheorghe says, because they’re good at showing data but lousy in leading to action. “They give you a lot of information, but the next step is what to do about it,” he says. “What are the courses of action I can take, how do I react to what’s happening?”

And maybe this sounds familiar: Data from one application that you’d like to use is tricky to move over into another. “We call it the alt-tab syndrome,” Gheorghe says. “You have to alt-tab between applications, some of which were built before the Internet, back in the client-server era.”

Lots of the existing business intelligence tools are old, not designed to be mobile or to handle volatility in the markets, and they don’t deal well with unstructured data, which everyone seems to want to get a handle on these days.

Gheorghe spent five years and change at SAP, including a stint as its CTO, by way of its acquisition of OutlookSoft. He then spent about nine months as Greylock’s Entrepreneur in Residence. During that time, he realized a perfect storm was happening: If you had to build the business of analytics from scratch, it would solve the problem of making you both cloud-ready and mobile, but also ready to handle mountains of big data. “We found a lot of pain in the core analytic processes that companies had spent a lot of money trying to solve,” he says. Pain like that creates an opportunity for the one who can make it go away.

Tidemark aims to deliver real-time metrics information that has been adjusted for risk and which takes into account all the various strategic, financial and operational forecasting a business does. “There are so many things that the consumer-side companies have done with big data like Facebook and Zynga, but nothing like that has happened in the enterprise,” he says. “Basically they’re still using things that are drilling down and across in grids that no one uses, and dashboards that are two weeks behind.”

Tidemark is launching three applications: Metrics Management and Management Reporting, which aims to answer not the “what’s happening?” question about a business but “why is it happening?”; Enterprise Planning, the classic budgeting, forecasting and analysis functions; and Profitability Monitoring by product, customer and channel — essentially where you’re making and losing money.

The company has also teamed up with three partners: SnapLogic has hooked up with Tidemark to integrate data in the cloud. And since you can’t seem to do anything in big data these days without using some version of Hadoop, the open source big data platform, Tidemark says it has signed up with Cloudera, which sells its own tricked-out version of Hadoop; and VMware, whose vCloud will run Tidemark’s cloud.

Gheorghe’s backstory is interesting. He escaped communist Romania in the late 1980s, but what moved him to leave wasn’t entirely political. He was involved in the trade of bootleg cassette tapes and heard Pink Floyd’s “The Wall.” As a product of the evil West, it was forbidden under the regime of Nicolai Ceaușescu. Gheorghe decided there was no way that a country that produced such music could be all that bad. So off he went.

It was of course more complicated than that, but the anecdote serves as a pretty good metaphor for what Gheorge is trying to do with Tidemark, Horowitz says. Yes, there are an awful lot of companies that seek to use the cloud to provide business intelligence. “There’s a lot of new things out there, including Salesforce.com, Successfactors, any of them, they’re new but they bring a lot of the old software paradigms with them,” he says. “None of them have been a complete re-think. But Christian has really done it. It’s ironic that he was the one who could get his mind out of the old paradigm, having been in it for the last 15 years.”

At issue is the idea of a tax repatriation holiday. Cash-rich companies, many of them tech companies, have billions stashed in overseas accounts waiting for a tax-advantageous moment to bring them back to the States. Companies like Intel and Cisco Systems and, yes, Oracle have been arguing that the government should do what it did in 2004 and give them a tax holiday that would allow them to bring these funds home, the theory being that it would amount to a privately funded stimulus.

The problem is there’s a big debate over what effect, precisely, the 2004 tax holiday had. As reported by The Wall Street Journal today, Levin, who doesn’t favor it, argued in a report released today (embedded below) that the effect wasn’t as good on the jobs front as many companies would like you to believe.

The interpretation is over how and under what circumstances Oracle’s payroll grew. Oracle has spent tens of billions of dollars acquiring companies like PeopleSoft and Sun Microsystems. Naturally, acquisitions add to a company’s payroll, but there are often job eliminations, too, as duplicated positions get eliminated.

Levin pointed out that in the case of two 2005 acquisitions — Retek and PeopleSoft — Oracle added fewer jobs to its overall headcount than there were employees of both companies, and so eliminated more jobs in the wake of the 2004 tax holiday than it created.

“Prior to being acquired by Oracle in 2005, Retek reported in its SEC filings that it had 531 worldwide jobs, while PeopleSoft reported that it had 8,748 employees in the United States. Oracle informed the Subcommittee that, in 2005, it increased its U.S. workforce by 4,440 jobs over the prior year. That 4,440 total, which reflects less than half the number of jobs brought to Oracle by Retek and PeopleSoft, indicates that, after acquiring the two companies, Oracle actually eliminated thousands of jobs previously held by U.S. workers.”

Oracle has since shot back in a statement from Senior Vice President Ken Glueck, citing the growth of its overall workforce since 2004 and in its research and development budget, which as of Oracle’s fiscal 2011 had more than tripled to $4.5 billion from $1.3 billion in 2004. And as of the quarter ended Aug. 31, it had more than $31 billion in combined cash and short-term investments, much of it held in non-U.S. accounts, that it would like to bring back to U.S. shores without having to pay an 8.75 percent repatriation tax.

“Between 2004 and today Oracle has grown its workforce from 42,000 to over 105,000 employees and we are hiring aggressively right now. Oracle spends well over $4 billion per year investing in research and development to fuel further growth. The only news in Senator Levin’s results-oriented ‘study’ is that he still opposes repatriation. With unemployment over 9 percent and more than $1 trillion dollars waiting to be put to work in the United States one would have thought he would revisit his long-standing opposition.”

levinstudy

The two most obvious examples are NetSuite, where Ellison was a founding investor, and Salesforce.com where CEO Marc Benioff is an Oracle alum — and where, come to think of it, Ellison was a founding investor, too. When you start considering the numerous Oracle alumni who have gone on to other things, Ellison’s reach becomes longer still.

The graphic below comes from the folks at Software Advice and aims to illustrate via these numerous connections the impact that Ellison and Oracle have had throughout the tech and software industry.

The top half represents independent companies where former Oracle execs either run the show or are in senior roles, while the bottom half shows companies that Oracle has acquired — and, let’s admit it, there have been a lot of them — where Oracle alumni in senior roles have found themselves re-integrated back into the mother ship.

While I can’t help but think the graphic is incomplete — it sure seems like there must be other companies that could be on it — it sure is interesting to look at.

Late Tuesday a Federal judge ordered SAP to pay interest on the gargantuan sum Oracle won against it in a November copyright infringement trial. But it also agreed to calculate that interest using a different method from the one employed by Oracle. And in doing so it lopped about $195 million dollars off the prejudgment interest Oracle had originally sought.

So good news or, rather, significantly better bad news. Certainly, SAP was pleased to learn it’s not obligated to pile quite as much prejudgment interest atop Oracle’s award as it might have been.

“While we believe that Oracle should only be awarded damages, we appreciate that the Court agreed with SAP on the proper calculation of interest in this case which dramatically lowered the amount,” an SAP spokesman told me. “The interest the Court ordered, based on the statutorily-set interest rate of .3 percent and the accrual period of September 29, 2006 through December 23, 2010, is approximately $16.5 million, rather than the over 200 million Oracle was seeking.”

Of course, that doesn’t make Oracle’s damages award any less massive. But then SAP hopes to whittle that down as well. As the company said in its filing last week: “Defendants plan to challenge that verdict on a variety of grounds in their post-judgment motions, including that it is excessive and overcompensates Oracle.”

Oracle declined comment.

PREVIOUSLY:

• Oracle to SAP: You Owe Us Another $212 Million
• Oracle-SAP Verdict: SAP Owes Oracle $1.3 Billion
• Oracle-SAP: Closing Statements Followed by Closing Insults
• Oracle-SAP Case Closes With $1.67 Billion Difference of Opinion
• LOLCatz: Safra on The Stand Again in Oracle-SAP Trial
• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

This in addition to the $120 million in attorneys’ fees SAP agreed to pay when the trial first began.

SAP, which believed that the damages amounted to about $28 million, had argued that Oracle was looking for an undeserved bonanza out of the jury, while Oracle contended the market value of licensing the IP was between $1.65 billion and $3 billion.

As Nucleus Research’s Rebecca Wettemann notes, the damage award is “a drop in the bucket” to Oracle, but a stern warning to the industry. Looking forward, she said, “You have to bet Oracle will be reminding customers they’re choosing between thought leaders and intellectual property thieves–and what that indicates more broadly about how SAP does business.”

In a statement issued after the verdict , SAP was contrite:

“We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary. This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation. The mark of a leading company is the way it handles its mistakes. As stated in court, we regret the actions of TN, we have accepted liability, and have been willing to fairly compensate Oracle. Throughout this matter, our customers, employees and partners have stood by us and, for that, we are grateful. Our focus now is looking forward, helping our customers be best run businesses, and extending our legacy of industry leadership well into the future. We thank the jury for its diligent service through this lengthy trial and the Court for its supervision of this complex case.”

On behalf of Oracle, President Safra Catz sounded as clinical as Jack Webb wrapping up an episode of “Dragnet.” “For more than three years, SAP stole thousands of copies of Oracle software and then resold that software and related services to Oracle’s own customers,” she said in a statement. “Right before the trial began, SAP admitted its guilt and liability; then the trial made it clear that SAP’s most senior executives were aware of the illegal activity from the very beginning. As a result, a United States Federal Court has ordered SAP to pay Oracle $1.3 billion. This is the largest amount ever awarded for software piracy.”

PREVIOUSLY:

• Oracle-SAP: Closing Statements Followed by Closing Insults
• Oracle-SAP Case Closes With $1.67 Billion Difference of Opinion
• LOLCatz: Safra on The Stand Again in Oracle-SAP Trial
• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

[Image credit: Pre-Ellison Samurai image by Artem Mirolevioch]

“I think it would have been helpful and important for the jury to hear from him. On the other hand, it wasn’t essential. We were able to put our case in anyway.”

– Oracle attorney David Boies changes his tune on the importance of HP CEO Léo Apotheker’s testimony in the company’s copyright infringement lawsuit against SAP

ORACLE on SAP
“Oracle brought suit to stop the illegal conduct and hold SAP fully accountable for its actions. Four years ago we discovered massive and indiscriminate downloading of software and support materials from an Oracle support Web site.

SAP immediately and, for three and a half years, repeatedly denied wrongdoing and responsibility. But on the eve of trial SAP began a series of admissions to claims of copyright infringement, violations of state and federal computer fraud laws, unfair competition, breach of contract, interference and other claims that settled liability before the trial began. Trial evidence and testimony showed that the SAP Executive Board was fully aware of the illegal activity and still acquired TomorrowNow to unlawfully take Oracle support revenues and move Oracle customers to SAP products and to disrupt and discredit Oracle. SAP not only failed to take action to stop the behavior, but it expanded it for 18 months after Oracle filed suit.

The pre-trial admissions and testimony over the last few weeks have exposed SAP’s scheme to capitalize on the use of stolen intellectual property. While Oracle seeks damages to fairly compensate it for this massive theft, it is perhaps more important to expose the illegal conduct by a dominant player in the industry and to send a message that intellectual property rights must be respected.”

SAP on ORACLE
The time for testimony and sidewalk claims by plaintiff’s counsel are over. The actual testimony took place in court.

We are very proud of the SAP legal team and our counsel Jones Day for their work in presenting our defense. We believe we have presented a solid case for the reasonable and appropriate compensation for damages by the limited actions of TomorrowNow. This case is not about who knew what, did what or supervised what…those issues were handled by stipulations prior to trial. This case is only about the damages, and we trust now in the jury to examine the evidence and testimony and reach a fair and just conclusion.

SAP has a long history as a trusted partner and we believe our legacy will extend beyond this matter. Throughout this matter over these three years, our customers and partners have stood by us and for that we are grateful. The mark of a successful leading company is the way it handles it’s mistakes. As indicated in court, we regret the mistakes of TN, we apologize to Oracle, and we have sought to address these mistakes by compensating Oracle for the damages. All along, we have done the responsible thing by admitting to the mistakes, taking care of the customers, winding down the TN business, and accepting liability. We are confident we can put this matter behind us and continue our leadership of this industry.

PREVIOUSLY:

• Oracle-SAP: Closing Statements Followed by Closing Insults
• Oracle-SAP Case Closes With $1.67 Billion Difference of Opinion
• LOLCatz: Safra on The Stand Again in Oracle-SAP Trial
• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

“The defendants have admitted that their infringement was massive and prolonged,” Boies said in his closing statement. “It is clear that SAP’s board and top executives expected it would be worth billions of dollars.” And just because SAP wasn’t able to generate that kind of value from Oracle’s pilfered IP, doesn’t mean it shouldn’t pay full fare for its infringement. “They took it and they have to pay for it regardless of whether they did well or didn’t do well using it.”

But SAP would rather not pay what it describes as a poorly caluclated “bonanza” award. “This case comes down to what is the best measure of compensation,” SAP attorney Robert Mittelstaedt argued. “Oracle’s [proposed damages] are based on guesswork,” while SAP’s are “based on reality.”

And evidently factoring “reality” into the equation cuts a hell of a lot of fat off the damages award at issue here. Because Mittelstaedt says SAP feels it owes Oracle just $28 million, which is, remarkably, even less than the $40.6 million its high-paid damages expert suggested.

PREVIOUSLY:

• LOLCatz: Safra on The Stand Again in Oracle-SAP Trial
• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

“[Their offer] doesn’t value our intellectual property at all,” she said, adding that TomorrowNow’s infringement encompassed more than just support documentation. “Yes, there were documents and help guides and things like that, but there was also the software itself–probably millions of lines of code, which is what the products really are….And we spend billions a year on R&D. This is a business where intellectual property is worth billions.”

Greg Lanier, a Jones Day attorney representing SAP, pressed her on that point insisting that Oracle isn’t owed such a large damages award because the value that the company lost to TomorrowKnow’s infringement is that “Oracle doesn’t get the chance to sell that software to someone else.”

But Catz wasn’t having any of it.

“You know, if Warner Brothers had a little subsidiary that copied Disney’s entire library and started selling it for $2 a copy, and they got caught and then offered to give Disney back half of what they made, is Disney’s library only worth $50?” she asked. “I mean, really. It’s valuable. The fact that it was copied doesn’t change that it’s valuable.”

Lanier quickly dismissed Catz’s point as a “colorful analogy,” reminding her that there are only 358 lost customers at issue in this case. Hard to imagine that such a “colorful analogy” in an otherwise tedious enterprise software case didn’t resonate with the jury, though.

Closing arguments in the case begin on Monday, with jury deliberations to follow.

PREVIOUSLY:

• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Indeed, speaking to reporters in the courtroom hallway this morning, Boies said that the evidence Oracle presented during the trial proved that Apotheker had knowledge of the copyright infringement scheme at issue in the case. “The testimony and evidence prove that Mr. Apotheker oversaw the copyright infringement scheme,” Boies said. “We did not show the 2 year old video deposition because it was taken before SAP stipulated to liability.”

Of course if Apotheker was as pivotal a figure as Boies maintains, one would think that there would at least be some content in his video deposition worth showing the jury. Certainly, that’s the view of SAP, which continues to maintain that Oracle’s repeated shots at Apotheker are more about the PR trial being conducted outside the courtroom than anything else.

“Today’s proceedings focused on the damages, and we remain confident that we have demonstrated a clear case for fair compensation to Oracle for the limited operations of TomorrowNow,” an SAP spokesperson said in a statement. “We trust now in the jury to bring this matter to an appropriate conclusion.”

HP has not yet commented on Boies’s remarks. The company reports earnings next week, and Oracle would obviously not be unhappy if any of this legal unpleasantness happened to lodge in investors’ minds.

UPDATE: Here’s HP’s official comment: “Oracle’s current stance is clear proof that they have been trying to harass Léo and interfere with his work at HP. As HP has said repeatedly, Oracle had ample opportunity to question Léo in the two years after he gave a full-day deposition. Léo was never asked to give an additional deposition. As HP and SAP have noted, Oracle chose not to include Leo as a live trial witness until after he was named CEO of HP. Léo had a limited role in the matter.”

PREVIOUSLY:

• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Then it’s on to closing arguments, now scheduled for Monday, and finally deliberation. Odd to think that the case has reached this point with so few SAP board members actually testifying live in court. Looking over the final witness list for the trial reveals a number of noteworthy no-shows (beyond Hewlett-Packard CEO Léo Apotheker): Former SAP CEO Henning Kagermann, COO and board member Gerhard Oswald, co-founder and board chairman Hasso Plattner, and, most interestingly, CFO Mark White, SAP’s designated corporate representative for the trial and the guy tapped by its board to clean up the TomorrowNow mess.

Why didn’t SAP put them on the stand? Perhaps it’s because Werner Brandt and SAP co-Chief Executive Officer Bill McDermott, the only board members to take the stand, fared so poorly there.

Or perhaps it’s simply because of the way the trial has played out. “We’ve said from the start that our focus is on damages, that we are interested in resolution of this dispute and determining a reasonable number for damages, and putting the matter behind us,” an SAP spokesperson told me. “The witnesses we call support that focus. Please keep in mind that there were 73 names on the witness list when it was submitted. Since that list was submitted, the scope of the trial has been narrowed considerably and the length of the trial has been shortened.”

UPDATE: I’m told Kagermann was prepared to testify live, but did not due to time constraints. His video deposition was played instead.

PREVIOUSLY:

• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

But SAP damages expert Stephen Clarke argues it shouldn’t be more than $40.6 million.

Which is ironic considering SAP paid Clarke’s firm $14 million in fees to determine how much the company owed Oracle for infringing its IP. That’s more than 25 percent of the sum Clarke ultimately settled on (and $10 million more than the fees Oracle’s expert collected for his testimony).

But, according to Clarke, calculating damages accurately requires a certain detached objectivity and evidently it comes at a price. “There’s no anger or punishment allowed,” Clarke said Tuesday. “What happened as a result of that infringement is what matters. The only way to do that is focus on the actual number of contracts at issue here.”

And that number is just 358, well shy of the “thousands” of contracts SAP hoped to win away from Oracle.

Too bad there’s no dollar value on SAP co-CEO Bill McDermott’s apology to Oracle yesterday.

Oracle’s cross-examination of Clarke is expected to continue into Thursday, after which SAP will likely show a bit of testimonial footage and rest its case. Presumably that will be followed by some rebuttal witnesses from Oracle on Friday and closing arguments sometime the following week.

PREVIOUSLY:

• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Why is Oracle so intent on putting former SAP CEO and new HP chief Léo Apotheker on the stand in the trial that will determine damages in Oracle’s long-running IP battle with its German rival?

SAP insists it’s to create a “PR sideshow”–which is true to an extent. But sometimes there’s more to a sideshow than meets the eye. Which is not to say that some nefarious scheme lies at the heart of all this, just that there is a lot of subtext to make sense of in this case. And it’s being written from two very different views of how damages should be calculated and how important Apotheker is as a variable in that calculation.

SAP’s view is that now that it has stipulated to liability, damages should be determined according to the actual number of contracts won by TomorrowNow and their value–not according to the number of contracts it hoped to win.

Oracle’s view is that damages should be determined by value of the intellectual property stolen from it and SAP’s ambitions for it. And while SAP’s stipulation to liability prevents Oracle from introducing evidence on liability, it leaves it free to introduce evidence for “context” on damages.

And that’s where Apotheker comes in.

According to evidence presented in the case, Apotheker chaired the launch of the Safe Passage program, of which the TomorrowNow acquisition was one part. And in his depositions, former SAP board member Shai Agassi clearly identified Apotheker as having some responsibility for TomorrowNow post acquisition, along with Gerd Oswald.

“I was the guy who led the the evaluation [of TomorrowNow] with Werner Brandt, who managed the acquisition teams at the time,” Agassi said. “The day of the acquisition, it was basically moved to Gerd Oswald, and the sales effort was moved over to Apotheker. So Safe Passage was managed by Apotheker and Oswald.”

Add to this the fact that Apotheker reported on TomorrowNow and the Safe Passage program in SAP earnings calls and was the only senior SAP exec quoted in a company release touting the program’s success, and it seems reasonable to expect that he might be able to provide some of the “context” Oracle is looking for (click document below to enlarge). One could argue that his expectations and forecasts for the program’s success speak directly to Oracle’s damages.

Or one could argue, as SAP and HP do, that his involvement was incidental and that he had no responsibility for TomorrowNow’s day-to-day operations and hence no knowledge of its transgressions.

But unless he testifies under oath, we’ll never know who’s right. And with Apotheker quietly going about his business at an undisclosed location, it’s looking like that’s how things will end up.

PREVIOUSLY:

• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

“Has SAP ever apologized?” Boies asked. “Would you like to do so now?”

McDermott’s reply, “I am sorry to Oracle.”

As I said, an uncomfortable moment–and evidently one of many. Boies subsequently asked McDermott if SAP had ever disciplined anyone at TomorrowNow for its misdeeds. McDermott said it hadn’t. “We were focused on a resolution with Oracle,” he said. “It’s a matter of priorities.” To which Boies replied, “I don’t mean any disrespect, but what is taking so long?”

To be fair, McDermott did offer some testimony supportive of SAP, noting that TomorrowNow didn’t generate a lot of software sales. “Not only was it not a big driver of software sales, it wasn’t a very successful [concept],” he said.

Maybe that’s why it took so many years for SAP to apologize.

PREVIOUSLY:

• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

[Image credit: Someecards]

SAP tapped McDermott as co-CEO earlier this year, but he’s been on the company’s executive board since 2008 and was serving as CEO of SAP America when SAP acquired TomorrowNow. Ironically, one of his first acts as co-CEO was to scrap an internal program examining SAP’s corporate values.

“Companies that are too internally focused are sick,” McDermott said at the time. “There’s nothing healthy about being obsessed with your own internal nonsense. If there was a project that built bureaucracy into the company or required people to think about our internal stuff, we’ve killed those projects.”

PREVIOUSLY:

• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

“As HP has said repeatedly, Oracle had ample opportunity to question Léo in the two years after he gave a full-day deposition,” a spokesperson told me Friday evening. “Léo was never asked to give an additional deposition. As HP and SAP have noted, Oracle chose not to include Léo as a live trial witness until after he was named CEO of HP. Léo had a limited role in the matter and Oracle’s current stance is clear proof that they have been trying to harass Léo and interfere with his work at HP.”

Point meet counterpoint. That said, Oracle likely would have been most interested in deposing Apotherker a second time after SAP’s stipulation to liability for contributory infringement. And that didn’t occur until October 29, 2010.

PREVIOUSLY:

• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

In a statement this afternoon, Boies reiterated the importance to Oracle of getting Apotheker in front of the jury, an effort thwarted so far because he has stayed out of range of a subpoena.

“[Former SAP director] Shai Agassi identified Leo Apotheker as being responsible for Safe Passage, with TomorrowNow as its cornerstone,” Boies said. “Werner Brandt [SAP director and CFO] did the same and testified that Mr. Apotheker was a member of the SAP AG Executive Board that fully supported the acquisition of TomorrowNow. He is clearly a very important witness in this case, especially now.

“When he testified at his deposition more than two years ago, it was before SAP and its wholly owned subsidiary TomorrowNow admitted infringing Oracle’s intellectual property through massive downloading and copying of PeopleSoft, JD Edwards and Siebel software. We think it is very important that Mr. Apotheker testify now, as a live witness in court, to explain his and SAP’s conduct.”

And if Apotheker still can’t be found? What then?

“Maybe we’ll just let the jury know that they’ve hidden him,” Boies said earlier. “I think it may be better for the jury to know that, here’s this guy who was at the center of all this [and we can't find him].”

In other words, jurors’ imaginations might be more powerful than the actual contents of Apotheker’s now very dated deposition. Better to tell them that the exec has been sequestered, and allow them to conclude that his testimony must be very damaging.

Of course, the flip side of this is that Apotheker and his deposition are inconsequential to the case and Oracle’s main goal in pursuing him has been to create a media circus around him to embarrass HP–which is what HP and SAP have been saying all along. And indeed, SAP repeated it again today in response to Boies’s comments. Said a spokesman, “Oracle’s heightened interest in Mr. Apotheker as a live witness came only after his appointment as HP’s CEO, a PR sideshow that has little to do with the real issues of this case–the actual damages from the limited operations of TomorrowNow.”

UPDATE: Reached for comment on Boies’ statement, HP maintained that Oracle’s efforts to put Apotheker on the stand are harassment and nothing more.

“As HP has said repeatedly, Oracle had ample opportunity to question Léo in the two years after he gave a full-day deposition,” a spokesperson told me. “Léo was never asked to give an additional deposition. As HP and SAP have noted, Oracle chose not to include Léo as a live trial witness until after he was named CEO of HP. Léo had a limited role in the matter and Oracle’s current stance is clear proof that they have been trying to harass Léo and interfere with his work at HP.”

PREVIOUSLY:

• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Called as a witness for Oracle, Catz reiterated an earlier point made by Oracle CEO Larry Ellison, saying that had SAP licensed the materials that its TomorrowNow subsidiary ultimately pilfered, it would have cost “billions.” She also reminded SAP’s legal team that her email on SAP/TomorrowNow as a competitive threat was written without knowing about TomorrowNow’s copyright infringement.

Worse, she dismissed SAP’s offer of $40 million in damages as laughable. “SAP paying us damages of $40 million would be a reward for their bad behavior. “It’s like taking someone’s $2,000 watch and hocking it for $20, and then offering to give us $20. It’s crazy. It completely undervalues the entire basis for our industry.”

A powerful jab, and one that’s making the rounds in media reports on the trial today.

PREVIOUSLY:

• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Sources in a position to know tell me that the PIs rumored to be searching for Apotheker are actually PSs–process servers, agents charged with delivering subpoenas to their intended recipient. And, as federal law dictates, their search extends no farther than 100 miles from the location of the trial, because if Apotheker is outside that 100-mile radius, they can’t serve him. And Oracle can’t compel him to testify. Which means it’s not really worth the company’s time or effort to hire Dog the Bounty Hunter to track him down in some Schwarzwald hideout.

As Oracle attorney David Boies said during a press conference after Monday’s proceedings, “Because of his role, we think it’s important for the jury to be able to see him live. But evidently, the embarrassment of avoiding trial is less than the embarrassment of testifying. We are trying to serve him. Still.”

PREVIOUSLY:

• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

On the stand in an Oakland, Calif., courtroom today, Ellison was such a picture of moderation and restraint that you almost wondered if his handlers had shot him up before his appearance–like sedating a dog for air travel. As one SAP rep told me, Ellison “was anti-climatic given his vituperative statements of the last weeks.”

Which is true. But his testimony was still quite damning–to my ears anyway. For one thing, he said that Oracle could have charged SAP $4 billion to license the programs that its TomorrowNow subsidiary wrongfully downloaded. For another, he said Oracle would have had trouble paying its employees if it allowed its rivals unfettered access to the software and support libraries at issue in this case.

“I’m not sure we would go out of business but pretty close to going out of business,” Ellison said during questioning by attorney David Boies. “If they could get that software for nothing, we’d have a hard time paying 100,000 employees.”

If that was the case, then why didn’t Oracle make a bigger stink over SAP’s acquisition of TomorrowNow when it was first announced? SAP’s legal team was quick to pick up on this and hammered Ellison, claiming there’s “not a shred of documented evidence” demonstrating Oracle’s concerns. But they didn’t get much of anywhere with that because it turned out there is some.

“When SAP announced the TomorrowNow acquisition,” Ellison said, “I made a public statement….I thought they might cheat around the edges in terms of our copyrights…and I publicly warned them that while they have every right to support our software, they have to respect our intellectual property–[they] can’t just redistribute it without paying for it.”

And, indeed, Ellison did do this during the company’s 2005 analyst day. “SAP has every right to provide support for PeopleSoft applications as long as they don’t violate our intellectual and contractual property rights,” he said. “It might make it awkward for them. That’s our intellectual property, and they should be cautious.”

Driving those remarks was Ellison’s fear at the time that with TomorrowNow, SAP might do Oracle real harm. “I thought this was a major program with a huge potential to do severe damage to Oracle,” Ellison said today, adding that his vision of how SAP planned to go about it wasn’t quite how things played out. “It was a brilliant idea to take our customers, but to execute it properly they had to go out and hire hundreds, if not thousands, of engineers to maintain PeopleSoft and JD Edwards and Siebel. That was going to be expensive. I certainly didn’t think they would simply take our intellectual property and then resell it to their own customers. I never thought that could happen.”

SAP’s attorney, Tharan Lanier, challenged Ellison on these points as well, suggesting Oracle is exaggerating when it claims that TomorrowNow’s infringement jeopardized as much as 20 to 30 percent of Oracle’s customers from its acquisition of PeopleSoft and 10 percent of those from the later acquisition of Siebel Systems. And in the end, Ellison conceded that only about 350 customers were lost as a result of TomorrowNow’s infringement. But he also managed to again suggest that potential losses were far, far greater.

“I think taking our intellectual property is a two-edged sword,” he said. “For [SAP] it means they have access to all our engineering output. They have regulatory updates at the same moment we have them. They have new versions of our software at the same time we have them. They have bug fixes at the same time we have them. So they should be able to provide the same quality of support that we’re providing except that they’re doing it at a very low cost, while Oracle bears the cost of all that engineering.”

The other side of that sword is running an irrational risk by taking our software. That’s a risk I certainly would never, ever undertake.”

PREVIOUSLY:

• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

[Image credit: Pre-Ellison Samurai image by Artem Mirolevioch]

According to Oracle (ORCL) CEO Larry Ellison, Sun (JAVA) is already losing $100 million a month as it waits for regulatory approval, and judging from the price of the company’s stock today, it may be losing even more than that. Shares in Sun slid to $8.11–about 15 percent below Oracle’s offer price and a far cry from the $9.18 they hit in mid-October.

Clearly, investors are alarmed by this latest turn of events, though industry observers say there’s little reason for them to be. Morgan Stanley, for example, believes Oracle’s acquisition of Sun will win EU approval with few, if any, modifications to the MySQL database software about which regulators are so concerned.

“Based on our diligence, we believe the EC is likely to approve the deal with no remedies or remedies pertaining to MySQL’s licensing,” the research house said in a note to clients today. “It is highly unlikely that Oracle restructures the deal (e.g. spins MySQL) or walks away.”

Morgan Stanley’s call: The deal will go through and at $9.50 per share. As the firm notes, the EU hasn’t blocked a U.S.-based transaction since GE/Honeywell in 2001.