Oracle has already reaped a windfall by damaging SAP’s reputation, and will likely hammer on the verdict in negotiations to try and steal SAP customers in its quest to dethrone the German company as the world’s biggest maker of business applications.
Oracle has spent more than $40 billion on acquisitions over the past half decade to muscle into that business, building a sideline to its core database software.
Oracle’s public relations blitzkrieg during the trial also ensnared another rival, Hewlett-Packard Co. Its new CEO, Leo Apotheker, was previously at SAP, and Oracle tried to force him to testify in the case.
Apotheker stayed out of the public eye for the three weeks the case was going on, leading Oracle to believe he was dodging the subpoena.
HP repeatedly said that Apotheker had limited knowledge of the matter, and accused Oracle of harassing its new executive.
While Oracle succeeded at stoking controversy about Apotheker’s absence from the trial, investors ultimately didn’t seem that concerned. HP’s stock rose after Apotheker appeared this week on HP’s quarterly earnings call and he articulated a strategy that apparently satisfied shareholders.
HP and SAP have maintained that Oracle’s interest in Apotheker was a sideshow. Oracle argued that Apotheker was a key player in the scheme.
If SAP decides to pay, coming up with the money is going to hurt. The $1.3 billion that the jury awarded Oracle is more than half of SAP’s total profit from last year.
But Ross MacMillan, an analyst with Jefferies and Co., noted that SAP could easily pay for the verdict with cash on hand. At the end of September, SAP’s cash stockpile stood at about $4.1 billion, at current exchange rates.
MacMillan said the verdict wouldn’t likely harm SAP in the long term.
“It has no real bearing on either company’s product portfolios or customer relationships, in our view,” he wrote in a note to clients Wednesday.
SAP had set aside just $160 million to pay a judgment against the company, and has already spent $120 million of that paying Oracle’s legal fees.
One reason that SAP’s courtroom drama might not damage its prospects is that it’s expensive and time-consuming for companies to change back-office software. Another is that SAP is the market leader in business applications that companies already rely on for some of their most vital tasks, including managing payroll and human resources.